Warren Buffett is best known for his investment strategies called ‘Buffett Rules’. These are a set of principles for managing Berkshire Hathaway, one of the largest and most profitable companies in the world.
Many are very familiar with Buffett’s investments, but how did Buffett pick what to invest where?
“Buffett Rules” is a series of technical investing principles. They are a part of Warren Buffett’s investments, and they’re meant to be learned, applied and practiced.
Technical analysis is one way to achieve this. However, technical analysis has a lot of other attributes and is not the only way to do it. Warren Buffett is known to practice his investment strategies by investing in some of these “no-nonsense” stocks.
Let’s take a look at some of the things you’d not expect to see in Warren Buffett’s technical investing.
Technical analysis focuses on individual stocks, not the company as a whole. By focusing on the company, we can use our technical analysis to value each stock at a certain price level. Warren Buffett is always interested in what has an impact on the business.
A good example is the Berkshire Hathaway-BHP Billiton (bhp), a mining company based on the deposit of gold ore.
In a lot of ways, the impact of the company is similar to those of other mining companies. Its business is still very good, and while it doesn’t generate that many profits, it has good cash flow.
We can use Warren Buffett’s technical analysis to value the company using the average income of its shareholders.
BHP also owns a huge amount of paper stock. It uses shares in its own name to cover the costs. These paper shares will be sold as “cash flow hedging”, which means that they are used to buy back their own shares, so they cannot be sold to the public.
This allows BHP and BHP shareholders to have some share price control.
You can see from the table below – the top five stocks include this technique, and three of them are BHP:
– 3BHP, which has an average income of $9.8 million and is a mining company:
– 4BHP, which is at an average income of $8.6 million and also a mining company:
– 5BHP, which is at an average income of $6.1 million and a utility company:
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