The Oracle of Omaha: A Strategy Derived From Warren Buffett

To conclude this holiday weekend, here are words of wisdom from the AAII regarding the Oracle of Omaha.  Hope everyone had a great holiday!  

AAII Stock Ideas

The Oracle of Omaha: A Strategy Derived From Warren Buffett by Robert Hagstrom Due to the holiday season, there will be no email with new stock ideas until Wednesday, January 10, 2024. Happy holidays from all of us at AAII!

Dear Fellow Investor,    In these volatile markets, we want to make sure our valued members get access to the best information possible to help you navigate the uncertainty. This is why you may have noticed the recent enhancements to our Stock Ideas Update email.  Each week, we give you education and stock ideas that are relevant to today’s market. Markets like these expose bargains, so we want to highlight a few ideas that can help you replenish your portfolio through sound strategies with good long-term performance.  If you find this information valuable and want an edge throughout this market volatility, you can access robust stock screens and evaluations through A+ Investor, a suite of rigorous investment tools that includes diversification analysis, stock evaluators and more than 50 stock screens updated every day.

This week we cover the stock-picking strategy of Warren Buffett and give you a list of stocks that currently pass our screen based on Robert Hagstrom’s extensive writings about Buffett’s approach. Possibly no other investor today is associated as strongly with the basic principles of fundamental investing as Buffett.    AAII has adapted Hagstrom’s research into a screen that returns 30 companies based on several fundamental and financial strength metrics. The screen finds companies with a history of strong returns to shareholders, positive gross operating income and positive free cash flow. Since 1998, AAII’s Buffett Hagstrom screen has an annualized return of 13.0%, which is higher than the S&P 500 index’s return of 6.0% over the same period. As of November 30, 2023, the screen is up 18.4% year to date compared to 19.9% for the S&P 500.    30 Stocks From the Buffett Strategy    While some critics feel that Buffett’s strategy cannot be duplicated, Hagstrom disagrees. He has authored several popular books that highlight Buffett’s core investment principles. In “The Essential Buffett: Timeless Principles for the New Economy,” Hagstrom argues that it is possible to duplicate Buffett’s approach within your personal area of expertise. He presents the approach through an accessible series of questions that should be explored with any potential investment. The approach demands that you:  Analyze a stock as a business,  Demand a margin of safety for each purchase,  Manage a focused portfolio and  Protect yourself from the speculative and emotional forces of the market.

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