How To Invest Like Warren Buffett Did 40 Years Ago

By | May 8, 2015

How To Invest Like Warren Buffett

How To Invest

I have often asked myself the question:

What stocks would Warren Buffett buy today if he was a young man?

I am sure that you go to bed every night asking yourself the same question?

 

Looking at Warrens portfolio today gives us very few clues.

These days he has so much capital to invest he can only invest in large mature companies. These companies do not have the same growth rate possibilities as his investments in the past.

Can we figure out what Warren would invest in today if he was starting all over again?

Yes we can. Here is the good news.

How to invest money

Market Watch just published an article that answers our question.

A study was just completed by the National Bureau Of Economic Research.

They have come up with a formula that mimics how Buffett invested in the past.

Their formula is complex with twelve different components.

The focus is on safe, inexpensive, high quality stocks.

These companies have low volatility and low price to book ratios. They are growing profitable companies that pay a dividend.

They have good five year prospects.

One disclaimer.

Warren has used leverage to magnify his gains over the years.

Without the leverage his returns would have been less but still spectacular.

For the average individual investor I would definitely not suggest using leverage.

 

Warren Buffett

Here are stocks that Warren might buy today based on the study.

CVS Caremark (CVS)

American Vanguard (AVD)

Vectren (VVC)

Scholastic (SCHL)

Kohl’s (KSS)

Owens and Minor (OMI)

Marcus Corp (MCS)

CryoLife (CRY)

Sparton Stores (SPTM)

Haverty Furniture (HVT)

Comtech Telecommunications (CMTL)

In addition there is an ETF Ishares MSCI USA Quality Factor (QUAL) and a mutual fund U.S. Defensive Equity Fund (REQAX) that have stock picking methods similar to Buffett’s.

So there you have it.

How To Invest Like Warren Buffett.

Be sure to do your due diligence or consult a financial adviser before investing in any stock.

Please leave comments below.

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Scott  The Frugal Man

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