Warren Buffett is one of the legends of stock investing.
We all know his story.
He started investing in stocks when he was just 11. By the time he was 29 years old, he was already a millionaire stock investor.
In his 60s, he became a billionaire stock investor.
Often, the biggest question people ask about Buffett is: how does he do it?
And: could I do it too?
Buffett has become rich by buying undervalued, or out of favor stocks, and holding them for years.
Sounds easy, right?
If it was, everyone would be able to do what Buffett has done.
However, Buffett does have some secrets that us mere mortal investors can deploy to help us pick great value stocks.
3 Secrets to Picking Great Value Stocks Like Buffett
1) Buy What You Know
Even investing legends have favorite products. Over the years, Berkshire Hathaway has collected a big roster of well-known companies including Dairy Queen, See’s Candy, and Burlington Northern railroad.
How many of these acquisitions were influenced by Buffett’s own preferences for the products?
In Berkshire’s stock portfolio, one of its longest owned stock positions is in Coca-Cola, which Buffett first began buying in 1988.
Is it a coincidence that Coke is one of Warren Buffett’s favorite drinks? Over the last decade, Buffett has disclosed in interviews to both Fortune and the Financial Times that he drinks 5 cans of Coke a day, usually Diet Coke or Cherry Coke.
Clearly, he’s a fan.
But you have to do more than just liking a product, to buy the stock.
Buffett has always been an avid researcher and used to order the Annual Reports from companies, when they would send them to you in the mail, to check the financials. He used to have stacks of the reports piled in his garage.
What’s your favorite product or brand?
We often have our fingers on the pulse of everyday products and activities, or even of something that is used in our jobs, which might get overlooked by others.
It’s a great way to find value stocks.
2) Buy Stocks on Sale
This sounds so simple, right?
But not so fast.
Since the March 2020 coronavirus sell-off, stocks have been on a tear. In 2021, the S&P 500 hit 70 new all-time highs, second only to red-hot 1995, which had 77 highs.
Over the last 2 years, it has become more difficult, but not impossible, to find good quality companies that are “on …….