There are no golden stock investing tips, Buffet himself is a firm believer in the Benjamin Graham School of practice that tells investors to put their money in "value stocks".
What are these "value stocks"?
These are company securities whose prices are so low that it seems impossible, when you compare this with the worth of the company.
But how do you know the value or the worth of a company?
For this, you need to check out the fundamentals of the business.
- Is the business profitable, and are the margins high?
- Is the organisation in a business that is a growing sector?
- Is the future promising?
- Does the company have low debt?
- Is there moderate to low competition in the field?
- Does the company have a declared growth plan?
- Is the management stable, and do they have a vision?
- When did the company go public?
The value investor is also not a short-term player. The person is there for the long-haul, and it really test your confidence in shares trading. Hidden gems are sure to be discovered by the market, today or tomorrow, or their financial figures will compel the investors and analysts to discover them, and soon enough the price will begin to climb. Since you have purchased at a really low price, you gain the most out of the increase.
Warren Buffett found such a hidden gem, a value stock. He purchased the stocks of Berkshire Hathaway for $10,000 in 1965. He took control in 2005, and in 2005, its value was $30 million.
The master investor that he is, Warren has taken value investing to the next level. While most people believe that undervalued stocks are sure to climb when the market discovers the value stock, but he doesn't bother about any demand and supply increase. He is not at all bothered about any activity of the market or the stock. His approach is to select a stock just on the potential of the company, and once he's made his choice, no one can influence his decision and he will holds it for the long-term.
