Invest like the Oracle of Omaha with these stocks
But what are the stocks that have been the basis of the
massive market outperformance? And what has made Buffett work so well over the
long history of the company that he leads?
Warren Buffett is one of the greatest investors of all time.
And he has the report card to prove it, as just noted above. There are plenty
of stories of his early years as an entrepreneur peddling door to door and like
me working at a local grocery.
He would go on to the financial markets as a broker, working
his way up at a series of firms. The basis for his public investment fortune
and renown began with a series of investment partnerships, with locals
investing in him and his investment process.
There are many bases in his investment approach. Amongst the
leaders are his drive to invest in or buy companies with intrinsic value that
was above the market’s price. This is when the underlying net assets that can
be broadly defined as book value are higher than the stock value.
There have been an are plenty of companies that fit the
criteria. Stock screens can easily pick out stocks that are currently trading
at discounts to book value. But there is more to his method. there’s also cash
generation. Generating cash is vital for companies, but consistently generating
lots of cash in an efficient and predicable manner is a core necessity for a
successful company and stock.
Blending these two concepts together leaves us looking for
reliably profitable companies trading at a discount to intrinsic value. Those
make for ideal investments.
And this is arguably why Berkshire Hathaway has had the
long-haul market outperformance.
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