Tuesday, November 4, 2008

Boring = Good Investments? - Look at Warren Buffet for clues!

Warren Buffet seems to like boring investments. See the "cut and paste" screenshot below. This is his list of top investments as of end 2007 from his letters. Don't you find some similarities or clues as to what kind of companies this old fogey likes?Look at the red arrows.


Below are a brief description:

Anheuser-Busch (beta:0.31)- domestic beer, international beer, packaging and entertainment.
Coca-Cola (beta:0.61) - manufacturer, distributor and marketer of nonalcoholic beverage concentrates and syrups in the world
Johnson and Johnson (beta:0.50) - research and development, manufacture and sale of a range of products in the healthcare field to consumers.
Kraft Foods Inc (beta: 0.59) - engaged in the manufacture and sale of packaged food products, including snacks, beverages, cheese, convenient meals and various packaged grocery products.
Proctor and Gamble ( beta: 0.52) - Beauty; Grooming; Health Care; Snacks, Coffee and Pet Care; Fabric Care and Home Care, and Baby Care and Family Care.
Wal- mart( beta: 0.05) - retail stores (supermarts,mega marts)
Washington Post(beta:0.65) - diversified education and media company

Notice how the betas are generally much lesser than 1? ( Beta measures the stock volatility.The smaller it is, the lesser its price will fall in a downturn compared with the general stock market. It will also generally rise less in a upturn. Cyclical industries usually have high betas above 1.)

Notice also that the customers of these companies are retail consumers which are diversified. Don't forget his holding company Berkshire Harthaway also consists of a large portion of subsidiary companies such as See's Candies which cater to retail customers.

Hmm..maybe its a good idea to start looking at such kind of stocks for investment..don't ya think?






2 comments:

  1. Boring stock, SPH lor, low beta:0.6 and last 5 years yield is more than 6%....

    ReplyDelete
  2. Yeah man agreed...SPH definitely a boring stock.

    ReplyDelete