Durable Competitive Advantage of Warren Buffett’s Favorite Companies

Warren Buffett

August 2015 was a month of roller coaster ride for most traders and investors.

In 2015, a serious of bad news such “Grexit” Greece exit, China’s Yuan devaluation and slower economic growth, Fed rate hike decision has sent stocks across global markets plunging and Straits Times Index (STI) falling below 3000. As of today, the Straits Times Index (STI) stands at 2,885.32.

I read about the “durable competitive advantage” of Warren Buffett’s favorite companies and was curious about how those companies will fare in times like this where financial analysts believe we are heading towards a bear market.

Will the market plunge like the 2008 financial crisis?

Here goes:

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Book Review: The Warren Buffett Stock Portfolio

The Warren Buffet Stock Portfolio

An excellent quote from Berkshire Hathaway shareholder letter in 1990 kept me excited about the book and I finished reading it within 2 days.

Even though we had bought some shares at the prices prevailing before the fall, we welcomed the decline because it allowed us to pick up many more shares at the new panic prices.

Berkshire Hathaway shareholder letters, 1990

The book focuses on Warren Buffett using increasing Earnings Per Share and increasing Book Value to select his portfolio of durable competitive advantage companies.

Each chapter is a case study of each of the companies in Warren Buffett’s portfolio with some brief history of the company and why Warren Buffett feels that the company has a competitive advantage.

Some of Warren Buffett’s favorite companies are

  • Kraft (Oreo, best selling cookie since 1912)
  • American Express (started in New York in 1850)
  • Wells Fargo (founded in 1852)
  • Coca Cola (first sold in 1886)
  • Procter & Gamble (started selling soap in 1837)
  • Johnson & Johnson (started selling surgical dressings in 1887)
  • GlaxoSmithKline (Merger of GlaxoWellcome found in 1880 and SmithKline founded in 1830)
  • Walmart (started in 1962)
  • Costco (started in 1983)
  • Moody’s Corporation
  • BNY Mellon
  • Sanofi
  • Torchmark Corporation
  • Union Pacific Railroad
  • U.S. Bancorp
  • Washington Post

Overall, I feel that this is a short and sweet book that is simple to understand Warren Buffett’s investment philosophy.

I give it an Average rating 3 out of 5 stars.