A guide to Warren Buffets investment strategies

is something we all would like to learn so that we can make our money work for us.

In the book The New Buffettology it covers the proven techniques for investing successfully in changing markets.

Warren Buffett is the World's most Famous Investor some of his tips are:

How Warren Discerns Buying Opportunities Others Miss

• Industry Recession
• Individual Calamity
• Structural Changes
• The War Phenomenon

Bad news situations come in five basic flavors

1. Stock market corrections
2. industry recession
3. individual business calamity
4. structural changes
5. war

The perfect buying situation is created when a stock market correction or panic is coupled with an industry recession or an individual business camamity or structural changes or war.

Ways of Finding companies with hidden wealth

It only takes skill some of the ways to do this is:

Companies that have a durable competitive advantage are Businesses that fulfill a repetitive need with a consumer product with brand name appeal.

• Brand name fast food restaurants
• Patented prescription drugs
• Brand name foods
• Brand name beverages
• Brand name toiletries/house products
• Brand name clothing business

The advertising business provides a service that manufacturers must continuously use to persuade the public to buy their products.

• Advertising
• Advertising Agencies
• Television
• Newspapers
• Magazines
• Direct Mail and Billboard Companies

Businesses that provide repetitive consumer services that people and businesses are consistently in need of.

These companies provide necessary services but require little in the way of capital expenditures or a highly paid educated workforce.

Low cost producers and sellers of common products that most people have to buy at some time in their life.

Such as Geico, Walmart, Furniture Brands International, Jewelry store chains etc.

As long as people need beds to sleep in and couches to sit on insurance for cars and help completing their tax forms, these companies wil lmake money. Lots of money for a very long time.

Now putting it all together to work for you

The questions you need to answer once you have assembled the financial information about a company are:

1. Does the company have a indentifiable durable competitive advantage?
2. Do you understand how the product works?
3. If the company in question does have a durable competitive advantage and you understand how it works, then what is the chance that it will become obsolete in the next twenty years?
4. Does the company allocate capital exclusively in the realm of its expertise?
5. What is the company's per share earnings history and growth rate?
6. Is the company consistently earning a high return on equity?
7. Does the company earn a high return on total capital?
8. Is the company conservatively financed?
9. Is the company actively buying back its shares?
10. Is the company free to raise prices with inflation?
11. Are large capital expenditures required to update plant and equipment?
12. Is the company's stock price suffering from a market panic, a business recession or an individual calamity that is curable?
13. What is the initial rate of return on the investment and how does it compare to the return on U.S. Treasury bonds?
14. What is the company's projected annual compounding return as an equity/bond?
15. What is the projected annual compounding return using the historical annual per share earnings growth?

To make the buy or not to buy is a question that makes investigating a company necessary so patience is key.