The Buffett Investment Strategy Essay by Neatwriter

The Buffett Investment Strategy
Applies the investment strategy employed by stock investor, Warren Buffett to six random stocks to see how successful it is.
# 61229 | 2,500 words | 8 sources | MLA | 2005 | US
Published on Sep 23, 2005 in Business (Finance, Investment and Banking) , Business (Statistics)

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The Buffett investment strategy is for individuals looking for relatively low-risk investments. But, low risk is not enough. Warren Buffett has been said to be a strong believer in the stock market and therefore does not put money in low risk and low return investment vehicles like savings bonds. The key is to avoid low return investment options. This paper examines six random stocks of which two are listed on the Singapore Exchange, two on the Hong Kong Stock Market and two from the NASDAQ. Once chosen, the stocks are evaluated against the author's perception of the Warren Buffett investment strategy. The summary of each stock includes company background information, their industry overview, a five year stock history when available, a calculated return on equity, the PE ratio, the retained earnings and projected or forecast company plans. Based on this information, the stocks are evaluated to see if they would in fact be sound purchases based on the Buffett philosophy. The paper includes graphs.

Buffett Style

From the Paper:

"One surprise regarding the Buffett philosophy for investing is that the investor need not require a portfolio with mass diversification in order to reduce risk. The approach focuses on only buying a relatively few stocks. One would think that such concentration of a portfolio that is without diversification should be considered risky. But Buffett seems to believe that thorough analysis of each company, patient purchasing at the lowest possible price and holding for the long-term will have weeded out the dogs. Warren Buffet is one of the richest men in America with probably only Bill Gates ahead of him in overall wealth. "So businessmen like Warren Buffett, Bill Gates, Jeff Bezos of, Michael Dell, the founder of Dell Computers, Bernard Marcus and Arthur Blank of Home Depot, and mutual fund manager Michael Price have been lionized in the press. Each became a billionaire, or near billionaire, in the 1990s." (Gross, 2000)"

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