Mary Buffett - The Warren Buffett Stock Portfolio: Warren Buffett Stock Picks: Why and When He Is Investing in Them

Bestselling authors Mary Buffett and David Clark examine seventeen companies that Warren Buffett has bought for himself and for his holding company, Berkshire Hathaway, as durable investments and explain why these companies are once again selling at prices that offer great long-term growth prospects.

WARREN BUFFETT has always believed that the time to buy stocks is when nobody else wants them. As we enter the fifth year of what many economists are calling the Great Recession, we find that some of the most amazing businessesthose with a durable competitive advantageare trading at prices and price-to-earnings ratios that offer investors serious long-term moneymaking opportunities. Pessimism about the banking situation in Europe and unemployment in America have created the perfect storm to bring stock prices down and present value-oriented investors some great possibilities.

In Warren Buffetts world, as stock prices decrease, the prospects for investment increase. Putting a number on those prospects tells Warren whether or not the stock is an attractive buy. The Warren Buffett Stock Portfolio explains how to do just thathow to value companies and conservatively estimate the kind of future return that an investment is offering at its current market price. Mary Buffett and David Clark look at stocks in Warrens portfolio as the basis for their analysis.

After a brief history of Warrens investment strategy, Buffett and Clark explain how to interpret a companys per share earnings and per share book value histories to quickly identify which companies have a durable competitive advantage and to project the compounding annual rate of return that an investment offers. The authors provide case studies and evaluations of seventeen companies in Warren Buffetts portfolio.

The Warren Buffett Stock Portfolio is a valuable companion to the other books in Buffett and Clarks successful seriesBuffettology, The Buffettology Workbook, The New Buffettology, The Tao of Warren Buffett, Warren Buffett and the Interpretation of Financial Statements, Warren Buffetts Management Secrets, and Warren Buffett and the Art of Stock Arbitrage.

MARY BUFFETT is an international bestselling author and speaker on the investment methods of Warren Buffett. She gained her unique insight while married to Warrens son Peter for twelve years. She is gifted in her ability to make the complex world of investments easy to understand and regularly lectures on the subject to audiences from California to New York to London to Beijing.

DAVID CLARK holds degrees in both finance and law, and in the late seventies was the founding member of the original Buffettologistsa small group of early Berkshire shareholders who studied the investment methods of Warren Buffett. He is now recognized as one of the worlds leading authorities on the subject and has written extensively on it. He lives in Warren Buffetts hometown, Omaha, Nebraska, and is the managing director of a private partnership that invests primarily in arbitrage situations.

Together they have written eight books on Warren Buffetts investment methods, four of them bestsellers in America and abroad.

The authors emails are: Marybuffettology@gmail.com and Davidbuffettology@gmail.com.

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ALSO BY MARY BUFFETT AND DAVID CLARK

Buffettology

Buffettology Workbook

The New Buffettology

The Tao of Warren Buffett

Warren Buffett and the Interpretation of Financial Statements

Warren Buffetts Management Secrets

Warren Buffett and the Art of Stock Arbitrage

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ISBN 978-1-4516-0662-1 (ebook)

This publication contains the opinions and ideas of its authors. It is not a recommendation to purchase or sell any of the securities of any of the companies mentioned or discussed herein SINCE SUCH DECISIONS INVOLVE RISKS INHERENT IN INVESTING. It is sold with the understanding that the authors and publishers are not engaged in rendering legal, accounting, investment, or other professional OR FINANCIAL advice or services. Laws vary from state to state and federal laws may apply to a particular transaction, and if the reader requires expert financial or other assistance or legal advice, a competent professional should be consulted. Neither the authors nor the publisher can guarantee the accuracy of the information contained herein. The authors and publishers specifically disclaim any responsibility for any liability, loss, or risk, personal or otherwise, which is incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this book.

For Miranda

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C ONTENTS

In these very turbulent times we think it is best to start with a quote from Warren Buffett during the 19901991 recession:

Nevertheless, fears of a California real estate disaster similar to that experienced in New England caused the price of Wells Fargo stock to fall almost 50% within a few months during 1990. Even though we had bought some shares at the prices prevailing before the fall, we welcomed the decline because it allowed us to pick up many more shares at the new panic prices.

Investors who expect to be ongoing buyers of investments throughout their lifetimes should adopt a similar attitude toward market fluctuations; instead many illogically become euphoric when stock prices rise and unhappy when they fall.

Warren has always maintained that the time to buy stocks is when nobody else wants them. In the recession of 20082009 we had that opportunity, and for those of us who did venture into that abyss, the rewards were tremendous. As we look toward the end of 2011 and the beginning of 2012, we are once again seeing stock prices at price-to-earnings-ratios that we havent seen since the early eighties. Coca-Cola is trading at 16 times earnings; in 1999 it was trading at 47 times earnings. The powerhouse Wal-Mart is trading at a P/E of 12; in 2001 it was trading at a P/E of 38. Procter & Gamble is selling at a P/E of 16; in 2000 it was trading at a of P/E 29. What does this mean?