How Buffett Chooses Superstar Stocks

Author: Liu Jianwei
Publisher:
Publish Date: 2006-01-01
Features: I believe that through systematic analysis of Buffett's fundamental stock selection criteria and classic cases in this book, investors can better learn Buffett's successful stock selection methods, thereby further improving their long-term investment performance. — Yang Minghui, Director and CEO, China Jianyin Investment Securities Co., Ltd.
This book will help Chinese investors better learn the stock selection strategies of the great investor Buffett, gradually improve their stock selection skills, and find their own "superstar stocks" in China, the world's most growth-oriented securities market. — Wu Xiongwei, Chairman, BOSCH Fund Management Co., Ltd.
This book systematically summarizes the stock selection wisdom condensed from Buffett's more than 50 years of investment experience, making it a user-friendly Buffett stock selection guide. — Li Chunping, General Manager, China Galaxy Fund Management Co., Ltd.
Reading this book requires only elementary arithmetic, not advanced mathematics, and only common sense, not professional investment knowledge. Ordinary investors can easily understand and master the stock selection wisdom of the greatest modern investment master, Buffett. — Sun Zhifang, Assistant General Manager, Research and Development Department, Huatai Fund Management Co., Ltd.
This outstanding research summarizes and summarizes Buffett's stock selection strategies in a simpler, more systematic, and more in-depth way. The detailed analysis of Buffett's classic stock selection cases makes it easier for investors to understand, master, and practice Buffett's fundamental stock selection criteria. — Zhang Hui, Investment Director, E Fund Management Co., Ltd.
With over 10 years of investment experience, I once felt increasingly lost until I read Buffett's letters to shareholders and gradually became a follower and practitioner of his methods, which significantly improved my investment performance. In 2005, I attended the Berkshire Hathaway Annual Shareholders' Meeting as a shareholder and had the privilege of hearing Buffett's teachings. My personal practice has proven that in the Chinese stock market, Buffett's stock selection wisdom and investment strategies are equally correct and effective, like the North Star guiding value investors in the right direction. — Zhong Zhaomin, Chairman, Shenzhen Dongfanggang Investment Management Co., Ltd.
Finding superstar stocks is our only opportunity to achieve true investment success. — Warren Buffett
Holding 42 billion U.S. dollars in 7 superstar stocks for Buffett; bringing him a massive profit of 27 billion U.S. dollars; creating the most amazing stock selection myth in history.
The top 10 famous sayings about Buffett's selection of "superstar stocks":
We prefer companies and industries that are unlikely to experience major changes in the future.
A castle-like, invincible economic franchise is the key to a company's continuous excess profits.
For investment, the key is not to determine the impact of a certain industry on society or how much it will grow, but to determine the competitive advantages of the selected company, and more importantly, the sustainability of these advantages.
The target companies we want to buy must not only have excellent businesses but also have outstanding, intelligent, and respected management.
The most important job of corporate managers is capital allocation.
One of my basic criteria for buying a company is to demonstrate sustainable and stable profitability.
I would rather choose a small and medium-sized enterprise with a 15% return rate and a capital size of 10 million U.S. dollars than a large enterprise with a 5% return rate and a capital size of 100 million U.S. dollars.
We choose companies with the following economic characteristics: Every dollar of retained earnings can eventually be converted into at least one dollar of market value.
Intrinsic value, though elusive, is crucial—it is the only reasonable standard for evaluating the relative attractiveness of investments and businesses.
We insist on maintaining a safety margin when buying. We believe this safety margin principle is the cornerstone of investment success.
The top 10 criteria for Buffett's stock selection:
1. Super long-term stable business criterion;
2. Super economic franchise criterion;
3. Super sustainable competitive advantage criterion;
4. Super star managers criterion;
5. Super capital allocation ability criterion;
6. Super product profitability criterion;
7. Super equity capital profitability criterion;
8. Super retained earnings profitability criterion;
9. Super retained earnings profitability criterion;
10. Super intrinsic value criterion;
11. Super safety margin criterion.
Buffett's 7 classic stock selection cases: Coca-Cola, GEICO, The Washington Post Company, Gillette, Metropolitan Broadcasting Company, American Express, and.
Buffett started with $100 and, through investment, became the world's second-richest man with a fortune of $44 billion.
Over 40 years, Buffett selected 22 stocks, invested $6.1 billion, and earned $31.8 billion, with an average investment return of 5.2 times per stock, creating the most amazing stock selection myth in history.
Fortunately, between 1977 and 2004, Buffett elaborated on his stock selection strategies in Berkshire Hathaway's annual letters to shareholders and analyzed all his major stock investments. Therefore, Buffett's annual letters to shareholders are the most real, complete, and great stock selection guides.
This book collects and organizes a large number of Buffett's excellent discussions on how to select superstar stocks and, on this basis, summarizes Buffett's stock selection strategies into 10 criteria in 4 steps: business analysis, management analysis, profitability analysis, and value-price comparison analysis. Based on these 10 criteria, the book provides a detailed analysis of Buffett's classic stock selection cases that earned him over $27 billion, enabling readers to systematically master the essence of Buffett's stock selection strategies in the shortest time.