Warren Buffett through the Berkshire Hathaway Group has been consistently one of the best investors in the stock market for many years. With success comes opportunity to learn from him and duplicate the success for you. In the stock market there are multiple methods to come to decision to buy and sell stock and when you find the correct formula for you then it likely will be a combination of more than one investor. A number of years ago, Mary Buffett wrote a book called Buffettology published by Rawson Associates, NY, 1997 in which she outlines the process or techniques which Mr. Buffett uses.

9. Where to look for Excellent Businesses

There are essentially 3 types of toll companies that produce excellent results:

1. Businesses that make products that wear out fast or are used up quickly, that have brand name appeal or if a merchant does not carry it, sales suffer
2. businesses that provide a repetitive service manufacturers must use to persuade the public to buy their products
3. businesses that provide repetitive consumer services that people and business are consistently in need of.

As you begin to look at what companies really do and how price sensitive they are, you will see many options for companies making money every year and you task is to break them down to what ones work for you.

10.  Management

In as much as the people are very important, if the business is really good as long as management does not screw up, then you have a stock worth investing in. The trick is to find honest hardworking people whose job is to profitability allocate capital, keep the return on investment as high as possible, and to think of shareholders when they have no investment opportunity at the moment.

Linking to dividend paying stocks, the book is full of details of how to do but the idea is to build the discipline in the decision making process to look at expected return on investments, what are the alternatives and use the power of compounding. Then your decisions are good decisions.

There are more questions than answers, till the next time – to raising questions.