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<ul class="summary-list"><li>Warren Buffett didn't just rely on financials and listings to pick winning stocks in the early days.</li><li>He spent weeks counting railcars, went to see "Mary Poppins," and tested the American Express brand.</li></ul><p>There's a common perception that Warren Buffett struck gold as a young investor by poring over long lists of stocks and scooping up the cheapest ones. But he went to far greater lengths to understand what he was buying before he pounced, a recent book points out.</p><p>Author Brett Gardner details several examples of the Oracle of Omaha's dogged pursuit of information in "Buffett's Early Investments: A new investigation into the decades when Warren Buffett earned his best returns."</p><p>The future billionaire and Berkshire Hathaway CEO skipped class to attend annual meetings or paid others to go and ask questions for him. He flew around the US to meet company executives and looked into their personal finances, habits, and motivations.</p><p>During a 2010 interview, Buffett's biographer Alice Schroeder also discussed Buffett's technique. "He behaves like an investigative journalist. "All this stuff about flipping through Moody's Manuals picking stocks … it was a screen for him, but he didn't stop there."</p><h2 id="baf8ce9f-94c2-4840-b7cc-d3f0142b1c86">Here are 6 of the most striking examples of Buffett's rigorous approach:</h2><ol><li><p>Before <a target="_blank" href="https://www.businessinsider.com/warren-buffett-made-20-billion-mistake-by-selling-disney-twice-2019-8">investing in Disney</a> in 1966, Buffett went to see Walt Disney, who gave him a tour of Disneyland and walked him through his <a target="_blank" href="https://markets.businessinsider.com/news/stocks/warren-buffett-berkshire-hathaway-disney-stock-brand-snow-white-mickey-2022-2">plans for the company</a>.</p><p>Buffett also went to see Disney's latest blockbuster in a New York City theater to gauge its long-term value.</p><p>"Here I am with a briefcase at 2:00 in the afternoon, heading in to see 'Mary Poppins,'" he <a target="_blank" href="https://tilsonfunds.com/BuffettNotreDame.pdf">once told</a> a class of college students. "I almost felt like I had to rent a kid."</p></li><li><p>Prior to piling into American Express in 1964, Buffett assessed whether the company's <a target="_blank" href="https://www.businessinsider.com/warren-buffett-and-the-great-salad-oil-swindle-2016-2">salad oil scandal</a> had tarnished its <a target="_blank" href="https://markets.businessinsider.com/news/stocks/warren-buffett-advised-american-express-ceo-protect-brand-name-2020-5">brand</a>.</p><p>"Buffett started dropping in on Omaha restaurants and visiting places that took American Express cards and Travelers Cheques," Schroeder writes in "The Snowball: Warren Buffett and the Business of Life."</p><p>He also tasked a friendly stockbroker with digging into the business, which produced a foot-high pile of research on American Express bank tellers and officers, restaurants, hotels, and credit-card holders. The investigation satisfied Buffett that the business was going strong and customers still trusted its products.</p></li><li><p>Buffett <a target="_blank" href="https://www.valuewalk.com/forbes-warren-buffett-omaha-beats-wall-street/">told Forbes</a> that he "spent the better part of a month counting tank cars in a Kansas City railroad yard" in 1965. The investor was digging into Studebaker and wanted to gauge the demand for STP, a gasoline additive sold by one of the vehicle maker's subsidiaries.</p><p>He knew where Studebaker was sourcing a key ingredient for STP, and how much it needed to produce one can. Tallying railcars indicated that STP production was ramping up, prompting him to pounce on the stock.</p><div type="image" title="Young Warren Buffett" height="788" width="1193" msid="111315243" hostid="261" sizebytes="13420"></div></li><li><p>As a graduate student, Buffett <a target="_blank" href="https://www.berkshirehathaway.com/letters/2010ltr.pdf">took a train</a> from New York City to Washington on a Saturday morning in 1951, only to arrive at Geico's offices and find the doors locked.</p><p>He banged until a bemused janitor let him in and directed him to the only other person he'd seen in the building: Lorimer Davidson, the future CEO of the insurance company.</p><p>Buffett seized the chance to pepper Davidson with questions about insurance for four hours. The answers confirmed he'd <a target="_blank" href="https://www.businessinsider.com/warren-buffetts-1951-geico-recommendation-2014-4">found a winner</a>; he went on to invest about two-thirds of his net worth in the stock, and Berkshire acquired the business in full in 1996.</p></li><li><p>In the mid-1950s, Buffett dispatched a partner to track down shares of National American Fire Insurance held by farmers scattered across Omaha.</p><p>"He cruised around the state in a red-and-white Chevrolet, showing up in rural county courthouses and banks, casually asking who might own shares of National American," Schroeder writes about Buffett's associate in her book.</p><p>"He sat on front porches, drinking iced tea, eating pie with farmers and their wives, and offering cash for their stock certificates."</p></li><li><p>Buffett took a different tack in his search for Union Street Railway stock in 1954. The company was seeking to buy back shares by running ads in a local paper, so Buffett ran his own ad inviting stockholders to sell to him instead, Schroeder writes.</p><p>He also woke up at about 4 a.m. on a weekend to drive to New Bedford, Massachusetts, and meet the company's boss.</p></li></ol><p>Buffett is known for investing based on fundamentals like company cash flows and price-to-earnings ratios. But Gardner's examples show he ventures far beyond financials and is both persistent and creative in his information hunts and stock searches.</p>

Testing brands, counting railcars, and watching 'Mary Poppins': how a young Warren Buffett found winning stocks 

<ul class="summary-list"><li>UBS strategists say six out of eight signs of a stock market bubble are already flashing.</li><li>Generative AI hype has driven stock prices to record highs, raising bubble fears.</li></ul><p>There's been <a target="_blank" href="https://www.businessinsider.com/category/stock-market-bubble">a lot of talk about the stock market being in a bubble</a> over the past year as hype for generative artificial intelligence drives stock prices to record highs.</p><p>In a recent note from UBS, strategist Andrew Garthwaite outlined the eight warning signs of a stock market bubble — and according to Garthwaite, six of them are already flashing.</p><p>That means the stock market isn't in a bubble yet, but could be soon.</p><p>"The upside risk is that we end up in a bubble. If we are in such a situation, then we believe it is similar to 1997 not 1999," Garthwaite said.</p><p>That's important because stock market bubbles often lead to a painful 80% decline once it pops, but Garthwaite says we're not there just yet.</p><p>"We only invest for the bubble thesis if we are in 1997 not 1999 (which we think we are)," Garthwaite said.</p><p>These are the eight stock market bubble warning signs, according to Garthwaite.</p><h3 id="27486235-8ce9-4051-a531-c63198c8e961">1. The end of a structural bull market - Flashed</h3><div type="image" title="stock market bubbles" height="395" width="1063" msid="110741712" hostid="261" sizebytes="24054"></div><p>"Bubbles tend to occur when historical equity returns have been very high relative to bond returns and thus investors extrapolate historical returns to be predictors of future returns - when in fact future returns, as shown by the ERP, are significantly below their norms," Garthwaite said.</p><h3 id="3cd5c168-ef11-4307-abe8-652655845155">2. When profits are under pressure - Flashed</h3><div type="image" title="stock market profits" height="454" width="702" msid="110741714" hostid="261" sizebytes="20622"></div><p>While S&amp;P 500 profits have been booming over the past year, there is another measure of corporate profits that should be monitored by investors.</p><p>NIPA profits measure the profitability of all corporations, including private companies, and when those diverge with the profits of publicly traded companies, investors should take notice.</p><p>"We can see this if we look at the TMT period when the NIPA profits fell while stock market profits rose. The same was true in Japan in the late 1980s," Garthwaite said.</p><h3 id="799b4498-f7d8-4bc7-b2b0-dc2f22624f9d">3. Large loss of breadth - Flashed</h3><div type="image" title="stock market breadth" height="424" width="1066" msid="110741715" hostid="261" sizebytes="44298"></div><p>When the stock market is extremely concentrated in a handful of companies that are driving the bulk of the gains, that's a sign that breadth is weak.</p><p>With record concentration in the mega-cap tech stocks, that is exactly what has been happening as the median stock fails to deliver strong returns.</p><p>"We can see this in particular if we look at the advance to decline line versus the S&amp;P 500 during the TMT period," Garthwaite said.</p><h3 id="2875069b-60c1-4696-82e7-083ae93ded71">4. Needs a 25-year gap from the prior bubble - Flashed</h3><p>"This enables a whole set of investors to believe 'it is different this time around' and develop theories that equities should be on a structurally lower ERP," Garthwaite said.</p><h3 id="f943b2e0-bd08-4554-8ae2-086147ea79f7">5. Has a 25-year gap from prior bubble - Flashed</h3><div type="image" title="Stock market bubbles since 1921" height="494" width="700" msid="110741716" hostid="261" sizebytes="16662"></div><p>"This narrative either revolves around dominance or more typically technology. In the 19th century there was a bubble associated with railways and in the 20th century there was a bubble in the run-up to 1929 which was associated with the mass production of cars, electrification of cities and the radio," Garthwaite said.</p><h3 id="4cd5c42e-b4a0-4a5c-81b5-72e6c3553a39">6. Retail starts to participate aggressively - Flashed</h3><p>When retail investors aggressively buy into the stock market, it allows the equity risk premium to fall to very low levels, leading to sky-high valuations.</p><p>"There is some evidence of this such as the bull/bear ratio of individual investors being very high relative to its norm," Garthwaite said.</p><h3 id="3ea343ee-94bf-4a99-8c8b-94cc6a3e3cfb">7. Monetary policy being too loose - Hasn't flashed</h3><p>Previous bubbles occurred when real interest rates were allowed to fall in a big way. That hasn't happened yet, as the Federal Reserve has yet to cut interest rates.</p><p>"Current monetary conditions look abnormally tight versus the output gap," Garthwaite said.</p><h3 id="78fd612a-3310-42f9-a907-ae2d84c062da">8. Extended period of limited declines - Hasn't flashed</h3><p id="78fd612a-3310-42f9-a907-ae2d84c062da">Previous stock market bubbles saw a multi-year period of limited sell-offs of less than 20%.</p><p id="78fd612a-3310-42f9-a907-ae2d84c062da">With the S&amp;P 500 experiencing a painful bear market in 2022 and selling off more than 25% at its low, there could be a long way to go before this condition is met.</p>

There are 8 warning signs of a stock market bubble and 6 of them have already flashed, UBS says       

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Testing brands, counting railcars, and watching 'Mary Poppins': how a young Warren Buffett found winning stocks

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There are 8 warning signs of a stock market bubble and 6 of them have already flashed, UBS says

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