I am not a very seasoned investor and I don’t know Warren Buffet’s entire stock algorithm. But, I have a good idea about parts of it.
Yes, Warren Buffet likes a company that has been around for a very long time that will not go out of business. Yes, he looks for good margins of operation and return on equity. He looks for companies with a “moat” where competitors cannot just run them out of business. But, there are things about Warren Buffet’s stock buying practices that you might not be able to guess just by crunching numbers. He looks for P/E ratios, but also low P/B ratios as that is statistically the best indication for the greatest increase in stock price in the long run.
Warren Buffet likes conglomorates that buy up smaller companies as he finds them steady and a good business model for the future. In the tech world, IBM seems to be the best conglomorate as they are huge and buy up smaller companies. Google and Facebook are in the process of becoming conglomorates too, but they lack the same stability as IBM who made it through the great depression which is a huge achievement for a company. I’m not sure if companies who made it through the last depression will make it through the next one — but, in my opinion, they are a better bet than new companies.
What? Is Warren Buffet a hippy now? If you read about Warren Buffet, you’ll know that his sidekick Charlie Munger used to go around to companies and walk around and talk to people. He could tell very quickly if people were happy at the company, and if they looked like they were working efficiently. My stock algorithm never predicted what Warren would buy until I started meditating on companies. What does this mean? I regularly meditate to get an idea of the mental state of the management and workers at a particular company. Some companies are more aggressive, while some have stress, happy people, anger, or other emotions. If I am going to invest lots of money in a company, I want to see happy and productive workers in my vision. Warren’s picks for companies don’t always measure up with numbers (although they don’t do poorly either,) but they do quite well when I meditate on them. WFC, KO, IBM, AXP, PSX and KHC all did splendidly in my meditation and I bought stock in each company as well as others.
I have been testing my psychic skills in the market. My accuracy rate was about 65% which is not bad. Anything above 50% is super. But, sometimes the cmpanies with the good vibes are not the ones that you will make money on. Sometimes it is companies that took a temporary dip in value that are going to bounce back and make you a quick 10% that are the ones to invest in. I meditated to see which companies I thought would do the best in the next four years. Warren Buffet’s picks yet again did quite well in my meditations, particularly IBM, KO and a few others. I also thought that Starbucks and Facebook (companies Warren doesn’t touch) will also do well in the next few years. Not to sound funny, but I take pleasure in owning SBUX and FB — it makes me happy! I’m convinced that Warren is very psychic and has an excellent sense of human nature. It seems clear that Warren knows long ahead of time which stock will not only go up, but go up a lot. I truly believe he is a 21st century oracle, and understanding what makes him tick could unleash the secret to your success!