Which Internet Stock would Warren Buffet Buy July 2009

Which Internet Stock would Warren Buffet Buy

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• Alan
• Kendall
• Value
• Investing
• Formula
• High
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[MrAlanKendall]

An Update in 2012. INET went from 7 to 14 for a 100% gain and was bought out. IACI went from 19 to 45 for a 137% gain and is still rising, Ebay is up 100%. These were the three winners that the formula did correctly choose. Yhoo is up 15%, Goog is up 29%, Amzn is up 137%, NFLX is up 100%. The formula picked 3 winners and avoided 2 that gained slightly but missed 2 winners. The formula did work very well.

[hyde4444]

It's ashame your formula did not favour to buy NFLX at the time...

[MrAlanKendall]

@hyde4444

When Warren can buy Wells Fargo, Conoco Philips, Nrg Energy and General Electric for less than the price of its assets during a down turn like in January 2009, why should he buy NFLX that is selling for six times the price of its assets? Wareen is all for the sure thing and Warren does not know if online movies will put NFLX out of business. Sure NFLX ran up but its run up is not sustainable (in 2010 NFLX is selling for 39 times the price of its assets).

[smissu1]

the equation should also account for the debt ratio that a company is holding. Probably should subtract that from the overall number or subtract from the book value.

[MrAlanKendall]

@smissu1

Warren says in his letters to his shareholders that when the net profits are high the the company does not usually hold as much debt as a company that has low net profits. I am keeping the long term debt in mind, but it is implied in the formula that companies with high net profits have less debt than companies with low profits.

[btvabowhunter]

You were dead on with IACI. If you bought when this video was first posted. You would have tripled your money buy now. ( Feb. 27,2012 IACI stock price is - 45.19) not bad

[soopie1]

@MrAlanKendall Well if you look with hindsight of additional year the formula is in place as couple of months after your answer NFLx stocks fell down 5 times in value in short period of time. Anyway WB allways prefered to invest in something he understands than to enter irrational investment of very volatile area of tech stocks that are turbo fueled by huge mass of reckless, very greedy and spoiled investors

[MrAlanKendall]

@Elbottoo

I have heard Warren talk about value to price ratios. I just made my formula simple because Warren says that simple is better than complicated.

[MrAlanKendall]

@thesimpsons2345

Not so, the formula identified IACI and INET at the stocks to buy with less risk than YHOO, EBAY, GOOG, AMZN and NFLX over the last year. Just because AMZN and NFLX did well does not discount that IACI and INET went up and YHOO, EBAY, GOOG went down. The formula accurately identified sure winners and not YHOO, EBAY and GOOG that went down.

[thesimpsons2345]

Amazon's stock has gone way up since last year, and Netflix's stock has more than doubled; obviously, your formula doesn't work.