Buffett dialogue MBA students use the butt approach to picking stocks

Buffett dialogue MBA students: use the “butt” approach to picking stocks

Tobacco Securities Market Weekly reports compiled according to November 15, 2013, Warren Buffett met with MBA students from the University of Maryland, including the eight universities, including, for students to ask questions, and Buffett one detailed answer. Details are as follows:

Q: In the past, you say your investment style is 85% Graham and 15% Fisher. This ratio changed?

Buffett: My investment strategy originated in Graham, I went to Columbia University, precisely in order to learn from Graham. Using Graham’s method, as time goes by, you can not lose money. Essentially, this is a very quantifiable way to invest, and you only need a rational execution. But on the other hand, when the size of your company is growing, increasing the amount of money, when this method is more and more difficult to play. Then, at a reasonable price to buy great companies would better to buy at a low price of ordinary companies.

Using pick up “butt” approach, can be found on the ground the rest of the half cigar, picked up after the point of it, you can free suck a few mouthfuls. Continue to do so, have the opportunity to get more free cigarette butts. This is one way, before I did, I found a lot of very cheap stocks. After experiencing Fisher and Charlie, I started looking for a better company.

At first I have done in two ways. Now, we just look for good companies, rather than the cheaper companies. Rail transport is the Big Mac, the good old days they would be as long as 10 years, 100 years. Burlington Northern Railway is now $ 6 billion pre-tax profit, while a few years ago when we bought it $ 3 billion. We now styles tend to be less Graham, Fisher and multi-directional shift, it is because the amount of our assets under management as required. If asset management is smaller, the margin of safety, we will buy more, cheaper stocks.

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