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Computerized Investing > Third Quarter 2009

Valuing Stocks the Warren Buffett Way

PRINT | | | | COMMENTS (7) | A A   Reset

by Wayne A. Thorp, CFA

Like most successful stockpickers, Warren Buffett thinks that the efficient market theory is absolute rubbish. Buffett has backed up his beliefs with a successful track record through Berkshire Hathaway, his publicly traded holding company.

Unfortunately, Buffett has never expounded extensively on his investment approach, although you can glean tidbits from his writings in the Berkshire Hathaway annual reports. However, a cottage industry has sprung up over the years as outsiders have attempted to explain Buffett’s investment philosophy. One book that discusses his approach in an interesting and methodical fashion is “Buffettology: The Previously Unexplained Techniques That Have Made Warren Buffett the World’s Most Famous Investor” (Scribner, 1999) written by Mary Buffett, a former daughter-in-law of Buffett’s, and David Clark, a family friend and portfolio manager.

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Discussion

Dan from NC posted over 3 years ago:

Table 1 overlays the text of the article. How can this be overcome?


R from AZ posted over 3 years ago:

That was my first impression also;however, the text reads OK as is.


R from AZ posted over 3 years ago:

That was my first impression also;however, the text reads OK as is.


Arnold from HI posted over 2 years ago:

The spreadsheet is out of focus. No download site for spreadsheet.


Jeffrey from FL posted over 2 years ago:

Can't discover how I can download the spreadsheet in this article or many of the other spreadsheet articles. What am I overlooking?


Randy from SC posted over 2 years ago:

While a pure review of the numbers might have led one to purchase woof in '09, the proof in the pudding to this point says that it would have been a terrible move. What about an analysis showing what has gone wrong? What happened that isn't shown by the numbers in the spreadsheet? The spreadsheet would suggest that BVPS now (3/12) should be around $16 and EPS $3-$3.50 when in reality they are ~$13 and $1.10?


LBG from CA posted over 2 years ago:

The excel spreadsheet can be found if you go to AAII "Home" and then go to "Quick Links" and scroll right to "Downloads".


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