Buffett’s Stock Selection Criteria:Comprehensive Analysis Of Financial And Non-Financial Indicators

The paper study Buffett ’s stock selection criteria base on the financial indicators and non-financial indicators,and conduct descriptive statistical analysis and empirical test.Compared with the previous study on Buffett’s Value Investment Theory,the paper is not only focus on individual case of Buffett ’s investment,but conduct manual collection of Buffett’s investment company list,including buy and sell time.Besides,I also collect their financial data and non-financial data on their buy time and sell time.So the paper can reach to a more convincing and robust conclusions because I carry out empirical tests and make deep analysis base on mare comprehensive and complete data on the Buffett’ investment.This study found that Buffett’s long-term holding company can indeed get excess return.the company’s profitability and operating income growth rate when Buffett made the buy decision was significantly higher than the selling point.In addition,the higher the profitability at the time of buying,the higher the compound annual return on investment.As for non-financial indicators,this paper found that the PE ratio in buying point is significantly lower than the selling point.The lower PE ratio at the buying point,the higher the annual investment rate of return.The conclusion of this paper confirms that the value investment advocated by Buffett is beneficial to investors to obtain excess returns.That is,we should invest companies with high profitability,high growth ability,underestimated value and promising development.This article also elaborated on some key point Buffett focus on when stock selection such as the company should have simple business and reliable management.Based on the conclusion of the test,the paper analyzes the Buffett value investment theory and puts forward some suggestions to the investors in the securities market.We should pay more attention to the fundamentals of the investment company,concerned about the long-term investment and the power of compound interest,as well as learning from Buffett,as a "industry expert" type of investors.