A GUIDE TO WARREN BUFFETT'S STOCK PICKING STRATEGY

When it comes to the world of investing, one man shines like a beacon above everybody else-Warren Buffett. Even now in his 90s, his annual letters and address to Berkshire Hathaway shareholders are eagerly awaited by shareholders and others alike. We dwell upon his investing philosophy in the Indian context and pick out a stock from the Nifty 500 list that fulfils his criteria of quantitative screening and shortlist one that you might find want to consider

- Shoaib Zaman

Is there any sports or movie star or social worker or anyone for whom you have such high regard that you would travel to a small town in another country to listen to the person once a year? Not just travel to that destination, but also to stand in line for a few hours before entering the stadium or hall. In the world of investments, one such enigmatic person is Warren Buffett; around 40,000 people from around the world travel to Omaha, Nebraska, when he addresses his company Berkshire Hathway's annual shareholder meeting. The event is no less than a mega performance by superstars.

Buffett is the richest person in the world who has made all his wealth from investing. His fan club includes investors from many countries, and there are more than a dozen books on him and his investment style.

We try to dissect his performance, explore his investing strategy to shortlist some stocks, and based on that, recommend one that you may consider buying.

DISSECTING THE PERFORMANCE

Buffett ran his investment partnership from 1957 to 1969, and reaped returns of 29.5 percent compared to 7.4 percent from the Dow Jones index (including dividends). After that, he moved to managing investments through Berkshire Hathway fulltime. He bought full control of the company in 1965, becoming the largest shareholder, and moved his entire net worth into the company in the 1970s. Between 1965 and 2022 (58 years), if someone had invested ₹10,000 in Berkshire in 1965, the value of their current holding would be ₹37.77 crore, growing at the pace of 19.9 percent per annum. During the same period, the S&P 500 (including dividends) went up to only around ₹24 lakh or 9.9 percent (see Buffett Performance).