Which Industries Does Warren Buffett Avoid?

Earnings can be used to evalute Mutual Funds just like stocks.

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[Wkwok11]

where do you get all those numbers from?????

[MrAlanKendall]

@Wkwok11

I go to clearstation and type in the ticker and select "key ratios". A menu comes up and if you click on the label, an online explanation will be given for each key ratio.



[01coyote13]

in the USA there are public companies and private companies which of those two does he buy stocks of ?

[MrAlanKendall]

@01coyote13

Warren says that there is a world of difference between a company like Coca-Cola that saves 12 billion per year (33.77% net profit) and does not need any influsion of cash and General Motors that needs big infusions of cash to build new plants for a new model of a car. Warren says that one wrong move by Intel or Gm and it could bankrupt the company. He says that with Coors or Wriglys or Coca-Cola you know you are going to make money, they are almost "dumb proof".

[singworshiplove]

Good job Alan. Thanks for the elaboration.  Keep it up!

[MrAlanKendall]

@01coyote13

With the formula that I use, only 1% of the companies have ratios over 10 so it cuts out my analysis of companies by 100 times. The formula really does steer me away from a lot of maybes to a lot of stocks that are sure to rise. With 100 times the time, I can calculate the cash on hand (total stock value)/(share price)*(cash per share) and the cash saved per year (total stock value)/(price to sales)*(%net profit).

[MrAlanKendall]

@01coyote13

Yes, Warren buys businesses from families that are 100% the owners, and he buys pieces of companies by buying stock. Warren says that there are really only two differences in a company that is 100% owned, and that is that 1) Warren owns profits generated and can re-allocate the profits in other investments and 2) Warren can change management if he has to. I am stunned by how complex some of the formulas that Warren uses so I only stick to one (%net +%dividend)/(price_to_book).

[01coyote13]

@MrAlanKendall So he purchases from both after properly studying the business? and what type and which financial ratios does he use the most to analyze financial statements?

[MrAlanKendall]

@01coyote13

Private companies do not have stock, you would have to buy the company directly from the owner as you would a home. Warren buys business outright from Owners such as See's Candies and Omaha Furniture Mart but he also buys stock in companies where he likes the fallen price like Cop, Ko, Ge, Wmt, Bk, and Wfc.

[Kellysayshello]

You really don't have a clue. You indicated that insurance companies only have a mediocre rating (according to your incorrect sytem), but Buffett loves to buy insurance companies because they give him lots of "float" (a growing pool of investable insurance assets). Often he can get control of $2 or more of investable float for every $1 in purchase price, this creates a unique form of leverage that can't be called like a margin loan. This internal leverage has been the foundation of his wealth.