If you want to look at an extremely successful stock picks strategy, you would be remiss to overlook the Warren Buffett strategy. The philosophy he uses is known as value investment and this comes from the school of Benjamin Graham. When he invested in Berkshire Hathaway in 1965 it cost him $10,000. This investment is worth $30 million today. Had he invested this money in the S & P 500, it would be worth the considerable sum of $500,000, however half a million is nothing compared to thirty million!

Looking at numbers like this is it not surprising that the Warren Buffett legend has also grown to mythical proportions. But how did he do it? By value investing, he like many other bargain hunters, looks for product that are undervalued, finds them and invest in their stocks. The majority of other buyers don’t see the investment value in these products, but Warren Buffett does.

Value investors are able to identify securities with unjustifiably low intrinsic worth. This intrinsic worth is predicted by analyzing the fundamentals of a company and this is not seen by the majority of buyers. Warren Buffett essentially trusts that the market will eventually favor the stock he invests in.

He is not concerned with facts such as supply and demand. This is normally what controls markets, but Warren Buffett is not looking for short term gains, he is looking for long term, return on investment. The quote that best describes the way he thinks is: “In the short term the market is a popularity contest; in the long term it is a weighing machine”.

Warren Buffett chooses stocks based on the overall potential of a company to make money as a long term prospect. Capital gain is not what he seeks and all the concerns he has are based on whether or not the company he targets is able to make money.

When he looks at an investment opportunity and evaluates the relationship between its stock price against the level of the company’s excellence. He also asks himself certain questions, such as performance regarding return on equity, if the company avoids taking on excessive debt (we all know how he feels about debt), how long the company has been public and whether or not it relies on a commodity.

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