Buffett’s investing secrets revealed

Warren Buffett’s investing success is the subject of study by a team of researchers from Yale and New York University who want to understand what makes the billionaire so good at business.

Standard measures can’t capture what makes Buffett so successful, so “it has to date been a mystery,” Andrea Frazzini, David Kabiller, and Lasse Pedersen in their paper, Buffett’s Alpha.

Read: Buffett makes $10 billion on crisis loans

His company, Berkshire Hathaway, has done better than every stock or mutual fund that has existed for more than 30 years that has been around since 1926, they write.

“We estimate that Buffett’s leverage is about 1.6-to-1 on average. Buffett’s returns can thus largely be explained by the use of leverage combined with a focus on cheap, safe, quality stocks,” they write.

They add that he has conviction, and has stuck with his stocks when others may have sold or changed careers.

“We find that accounting for these factors explains a large part of Buffett’s performance,” they conclude.

Read more about Buffett’s investing strategies here.

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Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.