What are Warren Buffett's investment criteria? Answer only if you can give specific formulas, examples, ect.

Answer 1

There are many 'takes' on his investment criteria.

Below is one.

Advise you go to his company's website and read what he writes.

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Principle 1: Keep it simple

People come up with all sorts of complicated systems designed to make stock picking easy. But Buffett’s approach is simple: find well-run businesses, then invest in them.

It’s a simple idea, but it takes hard work and discipline to put into practice. You need to do your homework before you invest.

Start by reading everything you can about a company and its competitors, beginning with its annual report — and the company profile in the News and Research section of the CommSec web site.


Principle 2: Be an investor, not a trader

Although he’s grown rich investing in shares, Warren Buffett doesn’t try to make money on the share market. For him, shares are just a tool for investing in businesses. It’s the quality of those businesses that counts, not the ups and downs of their share prices.

Then, after buying into an outstanding business, he holds on to it. The moral is to think about the business and its prospects and let the share price take care of itself.


Principle 3: Find outstanding businesses

This is the key to investing like Mr Buffett: finding outstanding businesses that you can rely on to keep increasing their earnings, year in and year out.

Mr Buffett has listed some of the questions you need to ask yourself about a business before committing your hard-earned money to it:

* Has it consistently performed well?
* Do I understand its business?
* Are its profit margins high?
* Are they increasing?
* Does it offer outstanding return on equity?
* Does it have an unbeatable competitive advantage?
* Is it free from excess debt?
* Does it have high-quality, ethical management?
* And, most importantly: can I buy it at a discount to its real value?


Principle 4: Make your own decisions

Buffett has good news for the DIY investor. He believes that you don’t have to be an economics graduate to make money from shares. What you need, according to Buffett, is an inquiring mind and a willingness to do your homework, plus the discipline to resist market fads.

By concentrating on business value, rather than share price, you can avoid being caught up in the waves of euphoria and despair that sometimes sweep the sharemarket. Instead of despairing at a downturn, you can celebrate, as new buying opportunities become available.


Principle 5: Leave a margin of safety

After finding an outstanding business, Buffett tries to put a value on it. But he is refreshingly candid about the fact that valuations can be both subjective and uncertain. That’s where his margin of safety comes in.

Mr. Buffett looks for companies that are trading well below his estimate of their intrinsic value. Then, if his estimate proves optimistic, or if some unforeseen event reduces the company’s value, there is still plenty of room for profit.


Principle 6: Focus on your strengths

Mr Buffett’s argues that you should throw out conventional wisdom about reducing risk through diversification — provided that you have the skills you need to pick a few outstanding businesses, and the temperament to stick with them.

You can increase your odds of doing that by concentrating on a few sectors, then finding out everything you can about them. As Mr Buffett says: “You don't have to be right about every company. You just have to make a few good decisions in a lifetime.”

Answer 2

It seems to me you are looking for a magic bullet. If you want specifics, you need to become a master at reading a financial statement. Then simply make offers on companies that are worth way more than your offer, which is what he did.

Answer 3

specific answer: dividend return on the stock. earnings growth potential --i.e.net profit. industries that "buffet understands" and they stand out in the public eye -- such as coca cola, phillips etc. but the go go companies of the internet and high tech are out. hope it helps. balance sheet figures are important -- such as book value. but extreme multiples of stock price to current earnings such as 100 times earnings etc. are out for buffet philosophy.
ps. the dow jones industrial companies is a good target -- provided their stock price is right.

Answer 4

Be a genius that knows the market .. Then buy low and sell high. This is all the advice you will get for free.

Answer 5

There's a great book written by his ex-wife.....it tells all!