Buffett A-Z

How Buffett looks at stocks

Thu, May 3 2018 • 7:37 PM EDT

Warren Buffett learned how to look at stocks from his mentor, Benjamin Graham. To Graham and Buffett, they aren't price quotes or lines on a chart. They're a slice of a company's profits far into the future, and that's how they need to be evaluated.

1994: Where the market is going "doesn't make a difference to us"

Warren Buffett says it's "foolish" to make investment decisions based on a macro view of the economy and explains why it's good for Berkshire when stocks go way down.

1995: Benjamin Graham's three key principles

Buffett says formulas aren't an important aspect of his or his mentor Benjamin Graham's methods for evaluating business, and lists the three key investing principles he learned from Graham.

1997: Buffett likes low-risk businesses and stock market volatility

Buffett explains why he thinks about business risk instead of stock market risk and why Berkshire makes more money during times of high market volatility.

1999: Acquiring businesses has "been our number one preference"

Buffett prefers buying entire business to buying "pieces" of businesses in the stock market, but says Berkshire can find more bargains when buying stocks.

2003: Why a "fretful disposition" hurts performance in investing

Buffett and Munger explain why investors should avoid "fretting" over day-to-day stock prices.

2008: Think of buying stocks like buying a farm

Buffett advises investors to evaluate stocks the way they'd evaluate a farm — by looking at what the business will produce over time relative to the purchase price.

2009: Don't try to time the market

Buffett and Munger say they don't hesitate to buy when they see a good stock at a good price.

2016: Go your own way - without envy

Buffett and Munger advise shareholders to figure out what makes sense to them and not worry about people who do "mathematically unsound things" (gamble) in the stock market.