Markets
Inside Warren Buffett’s Brain
What springs to mind when you think of legendary investor Warren Buffett?
For some, it’s his humble Omaha origins or his long-lasting obsession with Coca-Cola. For other people, it’s Buffett’s impeccable investing track record and extraordinary wealth that make a lasting impression.
While these are all legitimate connections to make with the Buffett name, perhaps he is most synonymous with the discipline of value investing – the style and mindset Buffett has made famous over the decades.
The Warren Buffett Series
Part 2: Inside Buffett’s Brain
Today’s infographic provides a deep dive into Warren Buffett’s brain, and it explains everything about his investing philosophy, along with the framework he uses to evaluate potential opportunities.
It’s the second part of the Warren Buffett Series, which we’ve done in partnership with finder.com, a personal finance site that helps people make better decisions – whether they want to jump on the cryptocurrency craze or follow Buffett’s more traditional path to financial success.
Note: Stay tuned for future parts with our free mailing list.
Warren Buffett’s investment philosophy is well-known.
He famously focuses on the intrinsic value of companies, and he buys stocks when they are “on sale”. Buffett’s not afraid to accumulate big positions in companies he likes – and his favorite holding period is “forever”.
While this formula may seem simple on paper, it’s extremely nuanced and complex in practice.
How Does Buffett’s Brain Work?
Warren Buffett has said that he borrows 85% of his investing style from Benjamin Graham, and 15% from Phil Fisher.
Benjamin Graham:
The godfather of value investing gave Buffett a framework for finding undervalued assets and companies.
Phil Fisher:
The famous growth investor showed Buffett the importance of investing with good management teams.
According to writer Robert Hagstrom, Buffett applies these ideas by focusing on four key principles of investing:
1. Analyze a stock as a business
Have the priorities of a business owner and look the company from a long-term perspective.
Is it increasing its intrinsic value? Would you want to own the entire company?
2. Ensure a “margin of safety”
Buffett considers “margin of safety” the three most important words in investing.
In other words, does a company have more intrinsic value than book value?
3. Manage a focused portfolio
Concentrate on a few stocks that will provide above-average returns over time. Buffett suggests investors think of this as owning a “punch card” with just 20 investment choices that can be made over a lifetime.
4. Protect yourself from Mr. Market
Mr. Market can be speculative and emotional, and he should not be relied upon as a predictor of future prices.
Instead, take advantage of Mr. Market periodically, whenever there is a fire sale.
Buffett’s Investment Criteria
Here are 12 key factors Warren Buffett considers when looking at potential opportunities:
1. Simplicity
Is the business easy to understand?
2. Operating History
Has the business been around for a long time, with a consistent operating history?
3. Long-Term Prospects
Is there reason to believe that the business will be able to sustain success in the long-term?
4. Rational Decisions
Is management wise when it comes to reinvesting earnings or returning profits to shareholders as dividends?
5. Candidness
Does the management team admit mistakes? Are they honest with shareholders?
6. Resisting the “Institutional Imperative”
Can the company resist temptations created by institutional dynamics, such as imitating peer companies, or resist changes in direction?
7. Profit Margins
Does the company have high profit margins?
8. Return on Equity
What is the return on equity (ROE) of the business?
9. Owners Earnings
What is the company’s ability to generate cash for shareholders, who are the residual owners? This is technically defined as free cash flow to equity (FCFE).
10. One Dollar Premise
For every dollar retained from net income, does the company create at least one dollar of market value?
11. Intrinsic Value
What is the value of the future owners’ earnings, discounted back to the present?
12. Margin of Safety
What’s the chance you’ll lose money on the stock, in the long run, if you buy it at today’s price?
Or to sum all of these ideas up succinctly, here’s a quote from the man himself.
My strategy is to find a good business – and one that I can understand why it’s good – with a durable, competitive advantage, run by able and honest people, and available at a price that makes sense.
– Warren Buffett
Other Notes
Part 3 of the Warren Buffett Series will be released in late February 2018.
Credits: This infographic would not be possible without the great biographies done by Roger Lowenstein (Buffett: The Making of an American Capitalist) and Alice Schroeder (The Snowball), as well as numerous other sources cataloging Buffett’s life online.
Markets
The Top Google Searches Related to Investing in 2022
What was on investors’ minds in 2022? Discover the top Google searches and how the dominant trends played out in portfolios.


The Top Google Searches Related to Investing in 2022
It was a turbulent year for the markets in 2022, with geopolitical conflict, rising prices, and the labor market playing key roles. Which stories captured investors’ attention the most?
This infographic from New York Life Investments outlines the top Google searches related to investing in 2022, and offers a closer look at some of the trends.
Top Google Searches: Year in Review
We picked some of the top economic and investing stories that saw peak search interest in the U.S. each month, according to Google Trends.
Month of Peak Interest | Search Term |
---|---|
January | Great Resignation |
February | Russian Stock Market |
March | Oil Price |
April | Housing Bubble |
May | Value Investing |
June | Bitcoin |
July | Recession |
August | Inflation |
September | US Dollar |
October | OPEC |
November | Layoffs |
December | Interest Rate Forecast |
Data based on exact searches in the U.S. from December 26, 2021 to December 18, 2022.
Let’s look at each quarter in more detail, to see how these top Google searches were related to activity in the economy and investors’ portfolios.
Q1 2022
The start of the year was marked by U.S. workers quitting their jobs in record numbers, and the effects of the Russia-Ukraine war. For instance, the price of crude oil skyrocketed after the war caused supply uncertainties. Early March’s peak of $125 per barrel was a 13-year high.
Date | Closing Price of WTI Crude Oil (USD/Barrel) |
---|---|
January 2, 2022 | $76 |
March 3, 2022 | $125 |
December 29, 2022 | $80 |
While crude oil lost nearly all its gains by year-end, the energy sector in general performed well. In fact, the S&P 500 Energy Index gained 57% over the year compared to the S&P 500’s 19% loss.
Q2 2022
The second quarter of 2022 saw abnormal house price growth, renewed interest in value investing, and a bitcoin crash. In particular, value investing performed much better than growth investing over the course of the year.
Index | Price Return in 2022 |
---|---|
S&P 500 Value Index | -7.4% |
S&P 500 Growth Index | -30.1% |
Value stocks have typically outperformed during periods of rising rates, and 2022 was no exception.
Q3 2022
The third quarter was defined by worries about a recession and inflation, along with interest in the rising U.S. dollar. In fact, the U.S. dollar gained against nearly every major currency.
Currency | USD Appreciation Against Currency (Dec 31 2020-Sep 30 2022) |
---|---|
Japanese Yen | 40.1% |
Chinese Yuan | 9.2% |
Euro | 25.1% |
Canadian Dollar | 7.2% |
British Pound | 22.0% |
Australian Dollar | 18.1% |
Higher interest rates made the U.S. dollar more attractive to investors, since it meant they would get a higher return on their fixed income investments.
Q4 2022
The end of the year was dominated by OPEC cutting oil production, high layoffs in the tech sector, and curiosity about the future of interest rates. The Federal Reserve’s December 2022 economic projections offer clues about the trajectory of the policy rate.
2023 | 2024 | 2025 | Longer Run | |
---|---|---|---|---|
Minimum Projection | 4.9% | 3.1% | 2.4% | 2.3% |
Median Projection | 5.1% | 4.1% | 3.1% | 2.5% |
Maximum Projection | 5.6% | 5.6% | 5.6% | 3.3% |
The Federal Reserve expects interest rates to peak in 2023, with rates to remain elevated above pre-pandemic levels for the foreseeable future.
The Top Google Searches to Come
After a year of volatility across asset classes, economic uncertainty remains. Which themes will become investors’ top Google searches in 2023?
Find out how New York Life Investments can help you make sense of market trends.

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