How Warren Buffett Invests and What Companies He Looks For | Exploring Markets

How Warren Buffett Invests and What Companies He Looks For

Warren Buffett, in 1982, wrote a letter to his shareholders about his investments and profits at the time. Near the end of the letter, he included something that's incredibly important to his investing style. In just 6 simple points, he tells everyone his favorite companies to invest in. He writes:
We prefer: 
1. Large purchases (at least $5 million of after-tax earnings). 
2. Demonstrated consistent earning power (future projections are of little interest to us, nor are “turn-around” situations).  
3. Businesses earning good returns on equity while employing little or no debt.  
4. Management in place (we can’t supply it). 
5. Simple businesses (if there’s lots of technology, we won’t understand it).  
6. An offering price (we don’t want to waste our time or that of the seller by talking, even preliminarily, about a transaction when price is unknown).
Pretty remarkable, right? You have just read about Buffett's investing style in 6 easy steps. So, if you're looking to mimic or follow his investing code, make sure to keep this handy. You can read the entire letter right here.