Warren Buffet Quotes gives the sole reason why I recommend every investor to follow his footsteps. But most of his strategies are completely not revealed. But we will try to extract few, which are very obvious from his statements from time to time, his investments etc.
1. Value Investing: This is the key. Different investors use different methods to find the intrinsic value of a company and compare it with the market value. If there is a huge discounting in the stock price, it comes to value picks category. The movement of a stock price never bothers Warren Buffet. He quotes “In the short term the market is a popularity contest; in the long term it is a weighing machine.”
He looks buying a stock as buying an ownership in a company. He just looks at a stock as if he is buying a local store near your home. He tries to completely understand what the store is doing, what its potential in future. Just apply this to a company stock; you will know how far you have improved your approach.
2. Past growth: How a company has given returns on equity over last 5,10 years is an important factor.
3. The debt component: A debt to equity ratio of less than 1 is preferred.
4. Growth consistency: A consistent growth in top line and bottom line. That is growth in net sales and net profit.
5. History: Buffet invests in companies that have gone public at least 10 years back. 6. Uniqueness: He tries to find companies that are selling unique products, which are different from competitors.
Once he finds such a company, he will look at how far down the stock is quoting from the intrinsic value. Intrinsic value put simply may be ‘what value each share will get, if the company is liquidated today.’
Technical analysis is a method used to predict the future stock price movement using historic data40 Years, since Warren Buffet took over Berkshire Hathaway. US $10,000 invested in it then is worth US $ 30 million today. The same money if you had invested in S&P; 500 would have been just 0.5 million dollars.