Warren Buffett
An Overview of Warren BuffettPeriod of Reign: 1951-current Associated With: Berkshire Hathaway Highlights: Started his own partnership at the age of 26, with personal wealth of $140,000 ($650,000 adjusted for inflation in 2008), and grew his personal wealth to $1,025,000 ($4,000,000 adjusted for inflation in 2008) in 6 years (by age 32). This is a return of nearly 58%/year.  Buffett will go on to become the richest man in the world next to Bill Gates through his work with Berkshire Hathaway. Quotes: Warren Buffett quotes at wikiquote Terms-Coined: Economic Moat. A moat-company is one which has products that consumers will pay more for in relation to a generic product of equal quality. An example would be Coca-Cola. Commodity companies are those that consumers will not pay extra for, such as salt. Post-Success: Buffett has committed to giving away 80% of his wealth. In 2006, he gave $30 billion to the Bill & Melinda Gates Foundation. Warren Buffett investing style summarized
Warren Buffett BooksTo be added. Additional Warren Buffett Resources
Stock Screen Parameters to Mimic Warren Buffett Investment StyleThe below bullet points attempt to recreate Warren Buffett’s investment style using technical parameters that can automatically be screened. These parameters are from an interpretation by Harry Domash based on the book “The New Buffettology”, and were run using the MSN stock screener. The text in italics explains how the parameter was defined in the screener. 1) Returns: Find companies with a consistent return on equity (ROE), but eliminate the companies that are high in debt, and which may be increasing their ROE by increasing their debt through capital expense Parameter: ROE: 5-year Average >= 17% 3) Profit Margins: Find companies with high profit margins, especially compared to others in the same industry. To negate tax rates, use the pre-tax profit margins Parameter: Pre-tax Profit Margin: 5-year Average >= 1.2 * Industry Average Pre-tax Profit Margin: 5-year Average 4) Value: Find companies that you don’t overpay for. Buffett’s valuation method of “owner earnings” is similar to price-to-cash flow Parameter: Price/Cash Flow Ratio <= .8 * Industry Average Price/Cash Flow Ratio 5) Debt: Eliminate companies that are high in debt compared to others in their industry Parameter: Debt to Equity Ratio <= .8 * Industry Average Debt to Equity Ratio 6) Management: Find companies that are well managed. High paid employees may be an objective guage for good management Parameter: Income Per Employee >= 1.1 * Industry Average Income Per Employee |