A Buffett-based Portfolio

02/15/2016 8:00 am EST


John Reese

Founder and CEO, Validea.com And Validea Capital Management

Warren Buffett has consistently outperformed the S&P 500 for decades, notes John Reese, editor of Validea, a service that develops a range of portfolios based on the strategies of legendary investors.

The Buffett-based "Patient Investor" strategy is the only one of our strategies that is not taken directly from the writings of the guru himself, as Buffett has yet to write about his investment strategies.

Our interpretation of Buffett's approach is based on the book Buffettology, written by Buffett's ex-daughter-in-law Mary Buffett.

The Buffett strategy buys stocks with an extremely long-term horizon. In fact, Buffett has held some of his investments for decades and he's said that Berkshire's favorite holding period is "forever."

Buffett doesn't try to capitalize on small day-to-day stock market movements.

Instead, he focuses on a company's business, knowing that, over time, the stocks of firms with strong businesses and good long-term prospects are likely to rise considerably, regardless of what those stocks are doing today, or tomorrow, or next week.

To find those strong businesses, this strategy goes back as far as a decade into a company's history, so only stocks with consistent long-term track records can pass this methodology.

Banco Macros SA ADR (BMA)
Apple (AAPL)
World Acceptance (WRLD)
Credit Acceptance (CACC)
Factset Research Systems (FDS)
Ross Stores (ROST)
TJX Companies (TJX)
Wipro Ltd. ADR (WIT)
Syntel (SYNT)
Westinghouse Air Brake (WAB)

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