86 The Business of Value Investingopportunities is to look at more stocks. And there ’ s no shortcut to
doing it; you start with a list and go through it all. Ironically, the
most advanced search strategy is the most basic mundane strategy
you can think of.
In 2004, Warren Buffett began investing in Korean stocks. Most
value investors and Buffett fans are familiar with the now - famous
story of how he received a manual on Korean stocks, spent some
time looking through it, and then picked a handful of stocks that
did remarkably well over the next couple of years. The real story of
Buffett ’ s Korean investment is much deeper and clearly illustrates
the time and intensity required when selecting securities.
To begin with, the famous “ Korean stock manual ” that Buffett
received from his broker was as thick as several phone books put
together.^7 Buffett went to work. Each night he leafed through the
manual, page by page, in much the same way he pored over 10,000
pages of Moody ’ s manuals. Buffett realized he was dealing with for-
eign numbers and nomenclature that confused him, so he learned
everything he could about Korean accounting. Once he had a fi rm
grasp of how Korean securities were traded, he went back to the
manual and shortened the list of thousands of Korean stocks to a
workable number based on fundamental valuation metrics. When
he was done, he had reduced the oversize manual to a couple
dozen stocks. Buffett ’ s account of the process is an excellent illus-
tration of his rational, disciplined approach:... this is how I do it. They are quoted in won. If you go to
the Internet and look them up on the Korean stock exchange,
they have numbers instead of ticker symbols.... Every night
you can go to the Internet at a certain time and look up some
issues and it ’ ll show you the five brokerage firms that would
have been the largest buyers and the five that would have been
the largest sellers that day.... That ’ s not easy to do. I ’ m learn-
ing as I go along....
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