Have you ever come across a book which fundamentally altered your idea about yourself? Renowned Psychologist & Nobel Laureate in Economics, Daniel Kahneman, by writing “Thinking Fast & Slow”, has achieved just that. In the process, he has uncovered many secrets behind the various quirks of our mind which influence the way we make decisions under risk.

As an investor, aren’t we faced with the possibility of risk every time? Aren’t we always keen to know more about the deep, murky secrets of human mind that can affect our wealth and happiness? The answer is ‘YES’.

To unlock the answers to these questions, please read on!

Why are we always in two minds?

The answer lies in the 1st Part of the book, wherein we are introduced to what the author has called as ‘Two Systems’. These are the two characters of our story:

• System 1 – The intuitive, impatient, automatically triggered part of our mind; over which we have little control.
• System 2 – The conscious self, that allocates attention to mental activities, which needs effort, concentration & ability to make decisions.

Then, following set of startling disclosures are revealed:

• System 2 normally gives a go ahead to whatever freewheeling intuitions the System 1 has to make to save the mental effort.
• System 1 though mostly correct is capable of making blunders!
• It is these systematic errors, in System 1 which leads us to do the blunders, making us deviate from ‘rationality’.

This book is dedicated to understanding these systemic faults inherent in System 1.

How do the two minds work together?

• System 1 constantly bombards the conscious System 2 with its impulsive suggestions, normally approved by the latter without many changes.
• System 2 comes into play when it detects a threat or when System 1 is too taxed & it attends to the difficulty by allocating mental effort.
• System 2 has a fixed capacity, which, it allocates based on the importance of the challenge at hand, while the lesser tasks are allocated the spare capacity.

Our System 2 is Lazy!

Our System 2 is a Lazy controller, which generally loathes mental work. It has two functions:

1. Solving Problems
2. Self-Control of impulses.

As a result, it has the following chinks in its armour:

• Depletion: When we are tackling tough problems, we lose our ability of self-control.
• With depletion, System 1 takes over & influences our thoughts to sometimes cause a failure of rationality.
• System 1 arrives at intuitions by exploring, simultaneously, multiple branches of associated ideas in our mind, created through repeated exposure.
• We have an innate tendency to assume, ideas that are easy to grasp for us, as true & familiar.
• We look at the world in terms of cause & effect, which is a fallacy of System 1, as it is incapable of statistical thoughts.

Thus, we have a tendency to let our feelings affect our decisions & we strive to reduce our mental load leading to biases.

We are utterly biased!

In Part II, the author talks about our biases. The author reveals that we have the following tendencies:

• We look at the content of messages, but not its reliability. This deludes us into a state of overconfidence about our decisions.
• Human beings loath randomness, our mind being conditioned to look for a cause behind every fact. 
• We are impacted by random thoughts, ideas & facts that we are exposed to, thanks to System 1. 
• What we can easily recollect from our memories appears to be familiar & friendly. Anything else is unfamiliar or threatening to us.
• We judge an outcome by being biased towards the obvious & ignoring the probability of the un-obvious. 
• System 1 has a tendency to make extreme predictions from the weak evidences.

To sum up, we are inherently ‘over-confident’ & this idea lays the foundation of the next part.

We are Overconfident!

In Part III the author explores the various causes of our overconfidence.

• Pervasive optimistic bias: We are under this illusion that we have substantial control of our lives. 
• Loss aversion: People are generally loss-averse, which makes them fear losses more than they love gains.
• Planning fallacy: We have a tendency to overestimate benefits and underestimate costs.
• What You See Is All There Is (WYSIATI): We naively interpret that a future event will mirror a past event. 

The key takeaway is, ‘History may not repeat itself! We must give ‘chance’, a chance in our decisions’.

So, how does one make sound economic decisions using all these lessons in Psychology?

In Part IV, he interprets the lessons of the previous sections in terms of economics. Here are the highlights:

• Human beings are neither fully rational nor selfish. 
• We take decisions based on whatever information we have, in a given moment.
• A given choice may lead to different levels of satisfaction or ‘utility’ in different people.
• People could be risk-averse or risk-loving & they could have different levels of satisfactions.
• The wealthy would be less sensitive to changes in wealth than the poor. 

Thus, happiness derived from a choice depends upon one’s history of previous outcomes.

So, what is the borderline between happiness & misery?

In part V, he concludes his treatise with an exploration of the inner meaning of happiness & well-being. 

• We have two selves: The experiencing self & the remembering self. 
• While you are reading this, it is the experiencing self that is at play.
• If you ever read the book sometime later & are reminded of this blog, the remembering self will bring its interpretation of the past to you.
• We remember such experiences by the ‘peak-end’ rule. 

As per the Peak-End Rule, the remembering self only remembers the peak of pain or pleasure & the way the experience ended. Our level of happiness or misery from recollecting a past experience is decided not by the experiencing self, but by the remembering self.

To sum up, our memory is unreliable & happiness is malleable as per the whims of our remembering self, when seen through the prism of memory!

On the whole, this is a good read for anybody who wishes to know about why & how we make economic decisions in our day to day lives including the way we choose a stock.

Here’s a video by Daniel Kahneman himself explaining this concept in further detail:

“I like to say success carries within itself the seeds of failure, and failure the seeds of success.”

Way back in 2006, I had watched a movie named “Gafla” and since then, stock investing fascinated me. The thought of stock investing has always been at the back of my mind. But things aren’t that easy and simple in real life as they are portrayed in movies. I was left with an open ended sack of questions, like: How do I invest and which stocks should I go for? How do I decide the time to enter and exit the stocks? What are the dos and don’ts? How should I evaluate my portfolio?

I started surfing the net to find solutions to my problems. This is where a review on ‘The most important thing’ by Howard Marks, chairman of Oaktree Capital Management, caught my eye. Well, the book doesn’t require praise from my end when it is highly spoken of by Warren Buffett, who called the book a rarity in its usefulness.

The reason why this book interested me was that, apart from being written by a renowned investor, the title suggested the key to investing. After all, many of us like short cuts in life. Be it study, career or success, we seek ways, steps, keys or secrets which eases our path. With these thoughts, I started the book thinking now stock investing will be a cake walk.

Well, I was wrong…

There is no such thing as one single important thing in investing, rather there are many aspects of a company (and a stock) that need to be considered and analysed in order to be successful and beat the average investor. This is the key highlight of the book.

Before moving to my personal notes on “The most important thing”, let’s know who Howard Marks is. Howard Marks, the chairman of Oaktree Capital Management ($77 billion under investment), is the world’s largest distressed debt investor who is known for his insightful assessments of market opportunity and risk. Now for the first time, all readers can benefit from Marks’ wisdom, concentrated into a single volume which caters to both the amateur and seasoned investor. Howard Marks also pens down and shares his investment wisdom surrounding key investing themes through memos; published regularly on Oaktree capital management since 1990. These memos are widely read and referred in investment community.

So here comes my personal note:

The gist of the book is that to be a successful investor, one should beat the market and other investors on a continuous basis. For this to happen, either you have to be very lucky or have superior insight. Since luck is fickle, so a great insight is a must. For a great insight, one can take courses in finance or be mentored by an intelligent finance guru. However, out of all those who do so, only few of them achieve the required superior insight, for delivering consistently above average results. Thus, in Marks’ words, we must have a ‘second level thinking’ within ourselves and try to be different and better than rest of the crowd.

The simplest way to succeed in stock investing is ‘Buy low and sell high’ but what is low and what is high?

Marks, in his book pointed two basic approaches of investing:

• Invest in company having strong fundamentals, and
• Invest depending on price behaviour

The latter is dependent on luck factor, the reason being, even if a coin turns head all twenty times it is tossed in the air, the probability of a tail in the next throw is still 50:50. So, fundamentals should be the basis for investment decision, which can be measured through value creation and growth orientation.

“Investment success doesn’t come from buying good things but rather from buying things well.”

So, how one can choose company and what price should be paid? We must go for a company which has value but does this mean you overpay to buy them? Definitely not! Rather, one should try to measure the value of company and buy the stock whenever the price is below the value and vice versa. Marks says ‘buying below value isn’t infallible but it’s the best chance one can have’. 

Marks focused on minimizing downside risk on investments and being defensive. It’s better to avoid loss when markets are down than to gain when markets are prospering. Risk is the key point of discussion. 

“You can’t predict. You can prepare.”

According to Marks, one should understand, realise and mitigate risk. Risk is related to future events which itself are uncertain and unpredictable. Hence, it is impossible to predict risk. 

“People generally feel that riskier investment provides higher returns but if this was the case they wouldn’t be risky!”

Risk is directly related to the relationship of price paid and their value worth. Risk inherently comes when the price is high. In fact, recognizing risk is the most difficult when emotions are running very high. Risk gives rise to loss only when things go wrong. But this doesn’t mean when things are good, there is no risk. For example, a good builder is able to avoid construction flaws whereas poor builder incorporates construction flaws. Unless, there is no earthquake you will not realise the difference. But, does this mean both are risk free or have same risk?

Generally, we have a tendency to believe in things which we can see, or say, what we can imagine. We strongly believe that what can’t be seen can never exist. This is termed as Black Swan theory. This is the reason of our trust that nothing can ever go wrong with blue chip companies and buy at whatever high price. But, always remember once in a while Black swan will materialize.

“Nothing goes in one direction forever.” 

Howard has strong faith in the recurrence of cycles. Pendulum swings due to greed and fear associated with investing. When one side of the pendulum swings reflecting positivity in the market, people out of greed are inclined to expect higher returns irrespective of risk incorporated. The pendulum swings to the opposite when uncertainty is everywhere. In this condition, people say things like ‘I am staying out of the market until the dust settles.’ But if you wait until the dust settles, there won’t be luring prices anymore. 

This recaps my memory of a chart which was very popular during housing bubbles:

“Those who believe that the pendulum will move in one direction forever – or reside at an extreme forever – eventually will lose huge sums. Those who understand the pendulum’s behaviour can benefit enormously.”

Most of the investors are trend followers, who simply follow the crowd because they feel safe in herd. But, Marks insists on doing the opposite of what crowd does: to be contrarian. When the market is booming and everyone is buying, it’s time to sell at high price and vice versa. One must not just do things because it is the opposite of what the crowd is doing but because one knows why the crowd is wrong.

“What the wise man does in the beginning, the fool does in the end.”

In both, economic forecasting and investment management, it’s worth noting that there’s usually someone who gets it exactly right. But, it’s rarely the same person twice unless he has precise insight. For this, it is very essential to have several years of data before judging an investor’s ability as luck cannot favour him each time.

As mentioned earlier, Marks is more focused on minimizing downside risk and playing safe thus propagating defensive investing. Defensive investor’s emphasis is on ‘Not doing the wrong things rather than doing the right thing’. He says one should be prepared for bad days, but how bad is the real question.

The critical element in defensive investing is margin of safety. 

Let’s understand through an example. Suppose you find something worth Rs. 100. If you buy it at Rs. 90, you have a good chance of gain, as well as, a moderate chance of loss if, in case, your assumption turns too optimistic. But, instead if you buy it for Rs. 70 instead of Rs. 90, your chance of loss is minimized. This reduction of Rs. 20 provides additional room to be wrong and still come out okay/fine. Low relative price is the ultimate source of margin of safety.

To recap, Marks believes in concepts of ‘second-level thinking’, the price/value relationship, margin of safety and defensive investing. He provides valuable lessons for critical thinking, risk assessment, and investment strategy. Encouraging investors to be ‘contrarian’, Marks wisely judges market cycles, occurrence of pendulum and achieves returns through aggressive yet measured action.

So finally, which element is the most essential?

Remember, there is no one thing that can be ‘the most important thing’. Successful investing requires thoughtful attention to many separate aspects, and each of Marks’ subjects proves to be the most important thing(s) which represents a checklist for investing. My sharing hasn’t even touched the surface in terms of what Marks conveys through his valuable writing. Anyone who is interested in investing but does not know what and where to start with, like me, can gain a lot from his valuable insights. I hope to get fruitful results by keeping these most important things in mind. Are you ready to put these time tested principles into action too?

It is that time of the year, when salaried employees are busy with the tax planning for the new financial year. Avenues are being finalized which would give them maximum tax deduction. Rajiv Gandhi Equity Savings Scheme (RGESS) is one such tax saving option introduced recently.

RGESS was announced in the Union Budget 2012-13, with the aim of attracting retail investors to the capital market. Further, the Union Budget 2013-14 announced modifications to the scheme, to divert investments from gold and other asset classes to equity markets. Since the announcement, there was confusion surrounding RGESS regarding first time investors, eligible securities and lock in period, which have, now, been cleared in the Union Budget 2013-14.

Let’s first try to understand some of these terminologies which are important in understanding the overall concept of RGESS.

RGESS is meant to attract ‘first time investors’ to the equity markets. However, the definition of a first time investor is unclear to many. In simple words, if a person has not invested in the equity shares including ESOPS (Employee Stock Option Plans) or derivatives in demat form, (s)he would be considered as first time investor. In addition, if one has invested only in bonds, debentures or equity mutual funds using demat, she would still be considered as first time investor.

Regarding eligible securities, stocks listed under BSE100, CNX100, PSU stocks, IPO of PSU’s (turnover> Rs 4,000 Cr.), FPO of PSU’s are allowed. Further, investment in exchange traded funds (ETFs) and mutual funds (listed and traded on stock exchanges), which have RGESS eligible securities as their underlying security are allowed. This is meant to reduce the risk associated with investing in equity markets for first-time investors.

Lock in period, if investments are brought in at once

Lock in period, if investments are brought in installments

Thus, first time retail investors investing up to Rs 50000 (Rs 75000 effective from April 1st, 2013) in eligible securities can claim tax deduction on 50% of the invested amount under section 80CCG of the income tax act. Tax benefit can be claimed for the first 3 yrs. of investments. This is over and above the Rs 1 Lac limit under section 80C.

The formalities to be followed…

The investor needs to open a new demat account or assign the existing demat account for availing a tax benefit under the scheme. Also, a copy of PAN card needs to be submitted along with Form A declaration to the depository participant to verify investor’s status. The investment in eligible securities can be made in one or more transactions in the year in which deduction has to be claimed (refer above for lock-in period in the latter case).

An investor can make any amount of investment in their demat account, but the amount eligible for tax deduction under the scheme is Rs. 50,000 (Rs.75000 effective from April 1st 2013). Furthermore, one can also invest in securities other than the RGESS eligible securities through the same demat account; provided Form B declaration has been submitted indicating that such securities are not to be included as RGESS investment.

Finally, should one invest in RGESS?

RGESS as a tax saving option is not likely to hold any appeal for investors.

Firstly, it is too complex. It has too many terms and conditions to follow, which does not help a new investor who is anyways apprehensive of stock market.

Flexible lock in feature along with a minimum of 270 days compliance period is little complex for a first time investor to comprehend. Moreover, it sort of defeats its own purpose by allowing the investors to trade, provided they maintain the investment balance for minimum stipulated time during flexible lock-in period.

This scheme does not sound attractive enough from tax benefit point of view, either. After going through the pain of getting a demat account, and subscribing to a mutual fund etc., saving a mere tax of Rs. 7500 (maximum tax benefit) seems highly insignificant for a person having taxable income of Rs. 12 Lacs.

RGESS allows you to invest in phases in 1st year. On the flip side, 1st year lock-in period will end only a year after one make his/her last installment in the 1st year. Let’s say, one invested Rs.20,000 on 5th September 2012, another Rs.20,000 on 3rd December 2012 and then Rs.10,000 on 15th March 2013. In this case, one’s 1st-year lock-in would end only on 14th March 2014. This means one’s first installment would be locked in for 1 year, 6 months and 9 days and one’s second installment will be locked in for 1 year, 3 months and 11 days. Thus, it’s a variable lock-in within the flexible lock in feature of RGESS, which, again, adds to its complexity.

Secondly, there are already cases of rampant misselling of the scheme. In a bid to reduce the complexity of the product, various fund houses have launched RGESS specific Mutual fund schemes. Distributors were told to aggressively promote these schemes and were paid a 6% upfront commission for the same.

It resulted into the scheme getting sold to the wrong people! RGESS provides tax benefit to first time investors only. However, due to misselling many existing investors ended up investing in these schemes. You can read more about it here.

As RGESS is open to all investors, it is the onus of the investor to ascertain his/her eligibility for RGESS to claim tax benefit, violation of which would lead to its withdrawal. Non-eligible investors will not get any tax benefit and their money will also be locked for 3 years. As data shows, majority of the money invested in the new fund offers (NFO) of closed ended RGESS scheme came from existing and not the ‘first time’ investors, thus defeating the core objective of launching RGESS. Although, fund houses have not officially declared the RGESS collection figures, going by the difference in the NFO collection figures and investment figures from the depositories (NSDL & CDSL), less than 15% of the NFO collection is expected to have come from ‘first time investors’.

Thus, existing investors, who invested in RGESS, will have their money locked in for three years without any tax benefits. While, they will still earn returns if the scheme performs, there might have been better opportunities for these investors.

So, finally, after so much of hullabaloo, should one go for it? Well, RGESS is clearly meant to attract those investors into the equity market who have shown averseness to it. The important question here is whether the incentives are good enough for someone who has never invested in stocks before? The importance of investing in the stock market and maintaining balanced investment portfolio to beat the inflation cannot be ignored.

We, at MoneyWorks4me, had initially said that the scheme might be a fillip for retail investors. You can read about it here and here. However, the details and the turn the scheme has taken, prove to be a dampener. We, thus, feel that the incentives in RGESS are not sufficient enough to entice first time retail investors delve into the stock market world.

“Go for a business that any idiot can run – because sooner or later, any idiot is probably going to run it.”

These are the interesting and popular words of Peter Lynch, a Wharton MBA graduate, a chameleon investor, and the man behind the 29% average annual returns that the Fidelity Magellan Fund made during 1977 – 1990, growing its assets from $20 million to $14 billion!!

About Peter Lynch . . .

After graduating in 1968, Peter Lynch started working for Fidelity Investments as an investment analyst in 1969; eventually becoming the firm’s director of research by 1974, a position he held till 1977. Lynch was named manager of the little known Magellan Fund in 1977 and achieved historic portfolio results in the ensuing years until his retirement in 1990.

His Investment Style

Peter Lynch’s investment style adapted to whatever worked at that time, with special emphasis on due diligence and stock research. He followed a bottom-up approach, concentrating on the company’s fundamentals. He only invested for the long run and paid little attention to short-term market fluctuations. His stock selection comprised more of growth and recovery stories.

He specialized in investing in fast growth companies with earnings growth of over 15% per annum. However, he took care that the Price/Earnings Growth ratio was less than 1.2, since he didn’t want to end up overpaying for growth. He loved companies that carry a lot of cash on the books, and hated those that carried large amounts of debt. He was amongst those, who didn’t pay heed to the macroeconomic conditions or where the interest rates were going. Lynch was a stout believer in investing in what you know, otherwise known as your circle of competence. He liked companies that were simple to understand, ones you could ask your neighbour about. He looked for companies with low market caps because he wanted to get in before others.

On the other hand, Lynch avoided stocks with certain characteristics that he found unfavourable, such as:

• Popular stocks in popular industries
• Small companies with big plans, not yet achieved
• Profitable companies engaging in diversifying acquisitions
• Companies with a single customer accounting for up to 25% to 50% of sales

Though Lynch’s investing style has been adaptive to whatever works, he did apply a set of 8 fundamental principles while stock picking:

Here, the key numbers to be looked into are:

• P/E Ratio
• Debt/Equity Ratio: should be low
• Net Cash per Share: should be high
• Dividend & Payout Ratio: should be adequate
• Inventory levels: lower the better

While examining the P/E ratio Lynch believes that people tend to pay too much emphasis to Price.

However, it is actually the growth in Earnings that tends to impact the future stock price appreciation (or depreciation). If earnings growth turns out as expected, the market participants applaud it, and the stock price rises. Conversely, if they fail to deliver as per expectations, the price takes a dip. Lynch does not believe that investors can predict actual growth rates. The company’s plan to increase earnings and its ability to fulfil that plan are its “story,” and the more familiar you are with the firm or industry, the better edge you have in evaluating the company’s plan, abilities, and any potential pitfalls. Hence, stability & consistency of earnings is very important. An extremely high earnings growth rate should be checked for its sustainability.

Thus, the P/E ratio must be judged with respect to its historic average, industrial average, and the earnings growth rate over a period of time.

The Return on your (time) investment…

Peter Lynch strongly believes that individual investors have a distinct advantage over institutional and large money managers, when using his approach. Individual investors, he feels, have more flexibility in following this basic approach because they are unfettered by traditional rules and short-term performance concerns.

Hence you, the intelligent investor, stand to make the most of Peter Lynch’s investment philosophy.

“I don’t want a lot of good investments; I want a few outstanding ones.”

These words reflect the modesty of Philip Arthur Fisher, who, with his 70+ years of successful investing experience, is considered the pioneer and the mastermind of the growth stock school of investing.

 About Philip A. Fisher… (1907-2004)

Philip Fisher, a 1928 drop-out of Stanford Business School, worked as analyst in Anglo-London Bank (San Francisco), switched to a stock exchange firm, and subsequently moved on to start his own money management business, ‘Fisher & Co.’ in 1931.

His biggest investing success dates back to 1956, when he acquired a lot of stock in Texas Instruments, long before it went public in 1970. It was first quoted at around $2.70, and went on to go as high as $200 – a rise of 7,400%, that too, without dividends. Fisher’s own gains were significantly higher, given the fact that he had bought the shares privately, and much before the company went public.

Fisher on Investing

While Benjamin Graham advised investors to invest in companies with well-established track records available at low valuations;, Philip Fisher’s investing guidance was more towards seeking out truly outstanding businesses and willing to pay even higher valuations in exchange for the prospect of much higher returns.

Broadly, Philip Fisher can be seen as a long-term investor in well-managed high quality growth companies at reasonable price. Specialized in innovative companies driven by R&D, Fisher’s main interest was to find growth stocks; companies that had a technological edge on their competition which they could use to their advantage to compound their returns over the very long time scales. He was prepared to hold it for over fifty years in some cases. He was one of the initial professional investors to recognize the merits of hi-tech firms like Motorola and Texas Instruments when they were starting out.

His Investment Philosophy

Out of the many ways in which Philip Fisher contributed to the acumen of the intelligent investor, the 2 indispensable ideas that hold a special place, which can be found in his investment classic ‘Common Stocks and Uncommon Profits’, the first investment book ever to make The New York Times bestsellers’ list, are:

• Fifteen points to look for in a Common Stock.
• His scuttlebutt or the business grapevine technique.

Fifteen points to look for in a Common Stock

His 15 points can be divided in two broad categories:

• Management’s qualities: He identified the must-have important qualities for high-quality management which includes integrity, innovation, vision, conservative, accountability, accessibility and good long-term outlook, openness to change, excellent financial controls, and good personnel policies.
• Characteristics of the business: This category includes a growth orientation, strong profit margins, high return on capital, a commitment to research and development, an effective sales organization, leading industry position and proprietary products or services.

His scuttlebutt or the business grapevine technique 

Fisher’s popular scuttlebutt approach endorses expanding foot leather in search of real information about a stock. He considered researching a company extremely important. It involves seeking out information about a business from both published sources as well as through the “business grapevine”. Investors should question customers, competitors, former employees and suppliers, as well as get information from the management itself. Through this process, one can often assemble a view of the business that a pure quantitative analysis could not reveal. The most important aspect of this, however, was about asking the right questions.

His view on dividends and P/E ratios

Dividends: Fisher believed dividends were a distraction for growth companies. Companies on a growth trajectory should be able to use their earnings more effectively by re-investing them in the business, rather than by distributing them to shareholders. Hence, he looked for managements he trusted; making the risk of re-investment of his earnings much lower.

P/E Ratio: Fisher did not believe that current and forecast P/E ratios were predictors of future market returns; reason being that this ratio is based on two things – the ability of the company to increase its earnings and the willingness of investors to bid up the company’s price, and in the short-term, even though you might be able to get an estimate for the former, judging the latter is an impossible task.

The 3 Don’ts

Fisher has identified the 3 don’ts to follow while investing in stocks:

1. Don’t over-diversify
2. Don’t follow the crowd
3. Don’t keep waiting if the stock is already at a reasonable price, but just missing your estimate by a rupee or two.

Reasons to SELL

“If the job has been correctly done when a common stock is purchased, the time to sell it is – almost never.” – Philip Fisher

However, in any of the following situations, Fisher would recommend a SELL:

1. If you have made a serious mistake in your assessment of the company.
2. If the company no longer passes the 15 tests as clearly as it did earlier.
3. If you could re-invest your money in another, far more attractive company.

The Return on your (time) Investment…

All in all, Philip Fisher has been an inspiration, and a great contributor to the world of investing. His notions and beliefs in the context of growth stock investing, have always delivered, and continue to do so.

His methods were so convincing that Warren Buffett incorporated a good deal of Fisher’s methods into his own stock selection process. Buffett has described his strategy as 15% Fisher and 85% Benjamin Graham.