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Intuitive investing, gut instincts, or how I'm not like Warren Buffett

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Regular BloggingStocks readers know by now that my investment strategies are fairly conservative and relatively coarse. Please don't begrudge me that. Although I don't track my picks in a portfolio, I do mentally track the general performance of the companies I tout, and I believe that overall I've done fairly well.

There are two major differences between my stock-picking efforts and what I perceive to be Warren Buffett's style. First, Mr. Buffett has years of experience that I myself do not have. Second, Mr. Buffett likes to have a greater working understanding of the nature of the businesses he chooses to investment in than I do. I choose my companies of favor with what I call my "big picture" strategy. All that means is that I use a broader view than most of my contemporaries who like to dig right down to the very roots of their picks.

I like to think that my strategy provides solid conservative support, which shall then free an investor to do some aggressive speculating with their profits.

For me, fundamentals must be solid, almost beyond doubt, but the profit margins can be less than most stock pickers aim toward. Barring any unforeseen key management shake ups or serious product failures, I tend to trust the fundamentals to hold relatively stable in the companies I choose by simply having taken a good historical view of the company's overall performance going back one to three years.

  • Consider the trending for the company over the past 52 weeks.
  • Consider trending of the company's product sector.
  • Consider overall consumer trending, fads, fashion, holy grail.
  • Consider availability of new capital for the product sector.
  • Look for solid companies that are stupidly undervalued.
  • Look for stupendous product innovation releases.
  • Associate with innovators.
  • Diversity, both geographically and in product, is paramount to me.
  • Name recognition is critical.

If I had put money on companies that I've pointed toward as good conservative investment choices, the following are companies (in no specific order) that I'd now hold a position in. Additionally, I'd be holding no bonds, except possibly local municipal bonds, at this time.

For an excellent snapshot of Warren Buffett's portfolio and style, please review the BloggingStocks series of posts, Examining Warren Buffett's Portfolio, by Brent Archer.

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DJIA-12.1710,214.77
NASDAQ-7.802,146.26
S&P 500-2.521,090.56

Last updated: November 10, 2009: 11:18 AM

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