95%的投资人是 short term motivated, goods new phenonmenon/bad news phenomenon. 历史上最终反映公司长期股权投资价值的是该公司的长期经济价值。他喜欢在短期负面消息蒙蔽了华尔街投资人的眼睛时，买入优良投资公司。
寻找consumer monopolies 而非commodity 企业:
高利润率 （可口可乐16%, 微软38%)
持续的高ROE - 有能力以目前事业赚钱，也能运用保留盈余为股东赚取丰厚获利。（可口可乐32%, 微软26.8%，过去40年美国平均12%, MASTER 48%, Disney, Gannett 25%, 麦当劳18%, UST蓣草 30%）
如公司把全部净值拿来支付股利，不留一分钱股东权益，公司还要价值吗？如果是，很可能是消费垄断型。（如american express 因偶然不幸事件严重损及财务结构，净值几乎为0，但是他们仍然有消费垄断权 ＋ 如果聘请全球最佳50位经理人再投入数十亿美元是否可以击垮该公司？（买进可乐和Gillette时就是应用这个判断原理) ，你不能劝人改用其他品牌的操作系统，可乐，麦当劳汉堡包，万宝路香烟
消费垄断权现金流量大，往往负债接近0。(检查公司财务能力最佳指标乃是盈利偿还负债的能力，即公司赚的钱几年能还清负债 Gannett Co 公司只需要一年，推荐小于3年)
盈利纪录是否持续稳定而且显示强劲上升趋势？ (1.07 1.16 1.28 1.42 1.64 1.60 1.90 2.39 2.43 2.69)
提供重复性传播服务的公司，制造商必须使用传播服务以说服大众购买产品 广告，电视，报纸 ABC
可乐33.6%ROE 分为两部分，19.4% 为保留，14.2%股利。首先估计未来十年的股东权益价值，然后乘以未来ROE，得出未来十年的盈利。1988年每股5.22买入可口可乐P/E＝14.5，报酬率是0.36/5.22=6.89%. 2000年股价如果15-25倍PE其股价大概是45-75元。巴菲特预计98-2000年投资报酬率是19.7%(5.22-45元 annual 19.7%)-24.9%(5.22-75元 annual 19.7%).
买入时机：整体股市严重下挫时（washington post, cocacola) 或者公司负面消息 使当时获利受挫公司面临的是单一的可以解决的问题。（运通，GEIGO）。
in 1979 General Foods, $37, buffet saw strong earnings (in the piror year, 1978, $4.65 per share) and that earning had been growing at an average annaul rate of 8.7%. Buffet project 1978 EPS could be 5.05. initial rate of return = 5.05/37 = 13.6%. (ie PE=7.3) and the that rate of return is going to increase each year by 8.7%. Over a period of time the stock market would acknowledge this increase in value and adjust the stock's price upward. in 1978 to 1984, its earning per share rose at an average annual rate of appx. 7%, from 4.65 to 6.96. the price upward to $54 in 1984. 1985, Philip Morris saw the value of General Foods's many brand-name products, which created a strong and expanding earning base, and bought all of warren's stock for $120 a share in a tender offer for the whole company. This gives Warren a pretax annual compounding rate of return approximately 21%.
RJR Nabisco in 1988 was selling for $45 a share, earning was 5.92 and was carrying very little debt. it had a long history of spectacular earning growth, which was made possible by the profits generated by the tobacco business. However, the public had labeled the company a pariah because of the lawsuites against it by people who claimed they had cancer, caused by smoking. The stock market saw this and responded by keeping the price of the stock low. Later the company offered $75 per share to buy back.
Graham: In general, the market undervalues a litigated claim as an asset and overvalues it as a liability.
Nine questions to determine if a business is truly an excellent one
No 1. Does the business have an identifiable consumer monopoly?
No 2. Are the earning of the company strong and showing an upward trend?
No 3. Is the company conservatively financed?
little or no long term debt. Coca-cola, Gillette, Wrigley, UST, international Flavor & Fragrances. Two consumer monopolies go to the altar, it will more than likely be a fantastic marriage.
No 4. Does the business consistently earn a high rate of return on shareholder's equity?
General Foods 16%, Service Master's 40%, UST 30%. consistently high ROE is a good indication that the company's management not only can make money from the existing business but also can profitably employ retained earning to make more money for the shareholders.
No 5. Does the business get to retain its earnings?
able to profitably employ retianed earnings at rates of return considerably above the average. a few business that didn't need to spend their retained earnings upgrading plant and equipment or on new-product development, but could spend their earnings either on acquiring new businesses or expanding the operations of their already profitable core enterprises.
No 6. How much does the business have to spend on maintaining current operations?
No 7. Is the company free to reinvest retained earnings in new business opportunities, expansion of operations, or share repurchases? How good a job does the management do at this?
No 8. Is the company free to adjust prices to inflation?
No 9. Will the value added by retained earnings increase the market value of the company?
"Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily understandable business whose earnings are virtually certain to be materially higher 5, 10, and 20 years from now. Over time, you will find only a few companies that meet these standards -- so when you see one that qualifies, you should buy a meaningful amount of stock. You must also resist the temptation to stray from your guidelines: If you aren't willing to own a stock for 10 years, don't even think about owning it for 10 minutes. Put together a portfolio of companies whose aggregate earnings march upward over the years, and so also will the portfolio's market value."
"The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage. The products or services that have wide, sustainable moats around them are the ones that deliver rewards to investors."
I'm Looking for business generally do not change and have durable competitive advantage and it have reasons why it can keep ROC, ROE.