Warran Buffet-stock picking strategy

Warren Buffett was pronounced the world's richest man for 2008 by Forbes magazine. Needless to say, he has done tremendously well amassing a fortune of $62 billion which is why so many people follow Warren Buffett's stocks.
The question is, why not just buy a share in his holding company, Berkshire Hathaway, and be done with it? The answer always comes down to money. In this case, Berkshire Hathaway Class A shares trade at around $130k which is quite cost prohibitive. Class B shares trade at 1/30th of the price of Class A shares but that still amounts to more than $4300.

And then you have to ask yourself is it really worth it? While the Berkshire Hathaway portfolio has tremendous blue-chip companies, you're also paying a premium on Buffett's good name. There's also the worry that Berkshire shares will decrease in value once Warren Buffett passes on. It will be a knee jerk reaction but that is the reality. So, why not do it yourself as an individual investor? A study showed that following Warren Buffett stock picks a month after they disclosed to the public still netted returns of over 14% a year.

There is a saying: "Give a man a fish and he will eat for a day. Teach him how to fish and he will eat for a lifetime."

If we use this as an analogy to investing, we can see that Warren Buffett is providing the fish, but as individual investors, we need to deconstruct his method of finding winning stocks to invest.

According to Buffett, here are his rules for investing:

finding a company he understands, favorable long-term economics, good management, reasonable price.

Imagine a topic as complicated as investing can be broken down to 4 simple rules like that. Keep it simple, as the housing market bubble with its complicated mortgage derivatives have taught us. And who can argue with the success that Warren Buffett has shown?

by Biz Blogger http://www.goarticles.com