Buy Stocks Tip

Warren Buffet is the greatest investor in the world. In 2006 he is the second richest man on earth. His company Berkshire Hathaway has gave its investor huge profit. A $10,000 investment in Berkshire Hathaway in 1965 would grow to nearly $30 million by 2005. Buffet got his investing style from Benjamin Graham School of value investing. Value investing try to find stocks which are low based on their intrinsic worth. In summary, Buffet look for:
1. Company with stable high and consistent ROE (return on equity).
2. Company with secure finance condition like low debt. This can be seen through low debt/equity ratio.
3. Company with high and increasing profit margin.
4. Company that have competitive advantage, things that other company did not have. Coca-cola has competitive advantage in its distribution that other companies could not match. You can see top companies with competitive advantage through Morningstar’s Bellwether.
Those companies above must be compared with other company in the same sector and size, and also check look for the past 10 years financial performance not just one year. Buffet also tends to stay away from mining or commodity stocks, because he believes that they are selling the same product and doesn’t have the competitive advantage. One other thing that I think many people do not have is patience, which Buffet has.

Tags: Berkshire Hathaway, value investing, Warren Buffet