I follow Buffett pretty diligently and have read the Snowball but I haven't really found an answer to this question. Curious to see if anyone else has.
I work in finance and when we look at a new deal, the operating model can get pretty complex. Now, I always felt that we're often being precise but not accurate and so it's more detail than is necessary, but every bank and investment firm I know of does similarly detailed modelling. Even my friends at hedge funds will often model out a company in a pretty thorough manner.
Buffett however doesn't use a computer or have a team of analysts working for him. It seems hard to be able to do DCFs, NPV calcs, IRR or anything without projecting out the three statements. Of course you can apply incredibly simple growth assumptions off of last year and get an estimate. What is your best guess as to the "modelling" he is doing? Have you ever come across a source that explains it.
And please don't misinterpret this. I in no way think anyone is going to become Buffett by understanding his models or calcs. It's just a huge curiosity I have given the disparity with the insane modelling most of Wall Street does and still fails to arrive at the results Buffett does.
Submitted February 24, 2017 at 12:08AM by algorithm45 http://ift.tt/2lfviT2
