What principles does Buffet uses while picking up a Stock ?

Warren Buffet (Age 87) is a legendary investor ,Chairman and CEO of Berkshire Hathaway. His net worth is 77.9 billion USD. 

Some of tenets of Buffet while picking a stock,

1. Doesn’t believe in IPO

2. Business should be easy to understand and has long history.

3. It should have great leadership team.

4. Look for long term return on investments rather than earning quick money.

5. Check financial statements look for PAT (Profit after taxes), EBITDA (Earnings before interest, taxes, depreciation, and amortization), market value etc. , study the business on your own.

6. How much money does it own offshore or in Cash money ?

7. What is its market capitalization ?

8. Look for if it has Higher margins , return on equity

9. He does not look for stock he calls it a business (% of Business)

In 1965 , Eugene Fama of University of Chicago published PhD desertion “The Behavior of Stock Market Prices”. Prediction about the future stock prices are pointless because the market is too efficient , in this market as info becomes available a great many smart people aggressively apply that info in a way that causes prices to adjust instantaneously”.

There will lot of other factors comes in consideration while picking any of the stock , these are some of key principles of Warren Buffet.

Cheers,

RVD