Collection: Warren Buffett - #272 'How to Pick Stocks For Long Term'



[Transcript]

AUDIENCE MEMBER 00:00

When you guys look at companies and you’re thinking about earnings into the future, just do you have any rule of thumb? How far in the future do you think you can look, typically, with a company you believe in, you think you understand the business?


Is it 5 years, 10 years? Do you really think you’ve got, you know, sort of the perpetual, into infinity income stream to calculate the value on? Thanks.


WARREN BUFFETT 00:17

Yeah, well we don’t project as far out as we might have to if we thought we could be successfully frozen (cryogenically frozen). (Laughter).


But we really — you know, we’re going to own these businesses forever. So, we want a business that we think is going to have, if run well, some kind of competitive advantage — over many decades.


I mean, we’re not going to resell them. And we better have something that is not only good now but that’s going to stay good.


So we don’t buy hula-hoop companies or pet rock companies, and we don’t buy companies in industries that we think will have great explosions in demand, but where we don’t know who the winners will be.


So we look a long — we try — we like to think we’re looking a long way into the future.


(Source: https://buffett.cnbc.com/2003-berkshire-hathaway-annual-meeting/)

~ Please visit the site above for full video of Berkshire Hathaway Annual Meeting.

 

[YAPSS Takeaway]

Step 1: Identify your investment time horizon.

(If you are "going to own these businesses forever" kind of investors, this works for you.)

Step 2: Choose the "Winner," a business with competitive advantages over many decades.


❗Note❗:

"So we don’t buy hula-hoop companies or pet rock companies, and we don’t buy companies in industries that we think will have great explosions in demand, but where we don’t know who the winners will be." ~Warren Buffett