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Warren Buffett on Chocolate and Candy

The following video of Berkshire Hathaway’s (BRK-A) Warren Buffett, gives great insight into how he thinks before making an investment, how he created value added for the company, and increased sales substantially. No wonder why he is a billionaire and top trader and investor.

In the video, he discusses his purchase of See’s Candies, which operates over 200 retail shops in the western United States. You will also see Buffett’s sense of humor. If you have never had See’s Candies, you need to try some at your first opportunity. You will love the peanut brittle, my favorite.


 


If you think there are investment opportunities with other candy companies, here are a couple worth looking at.

Hershey (HSY), founded in 1894, is the largest manufacturer of chocolate in North America and one of the largest chocolate and candy companies in the world. Hershey’s Kisses were invented in 1901 and their chocolate chips were introduced in 1928. The stock has a P/E of 22, a forward PE of 17, with a flavorful yield of 2.8%. It sports a PEG ratio of 2.39.

Tootsie Roll Industries Inc. (TR) is known for its ever famous Tootsie Rolls. It also produces Apple Pops, Charms, Sugar Daddy, Sugar Babies, and Tootsie Roll Pops. The stock has a P/E and forward PE of 26 and sports a yield of 1.3%.

What Best Technical Analyst Do ?

-Technicians believe that there is wisdom in price. That price has memory. That people who were inclined to buy at a certain price are somewhat likely to buy there again. Unless something’s changed, in which case their failure to re-buy (or buy more) at that formerly significant price level can be interpreted in an entirely new way – what was once an area of support on a chart becomes an area of resistance.

-Technicians believe that trends persist, in both directions, because market participants act on “news” at different speeds and act more boldly (or fearfully) the longer a particular movement in the markets goes on. This is why bull markets often end with a buying crescendo in the riskiest securities. Risk appetites grow as an uptrend persists, the desperation to participate gets stronger, it does not fade gently.

This is also why selling becomes more fierce when the market is at a 20% discount to its previous high than when it is at a 10% discount. “How could it be even more urgent to sell down 20% than it is down 10%?” someone would ask. Going by fundamentals, it isn’t. But investors only pay lip service to fundamentals. What they are more concerned with is owning less of the thing that looks stupid to own – and the lower it goes, the stupider it looks.

Unless you buy into the idea that rational behavior rules the investment markets. In which case, you’re reading the wrong writer 

-Technicians find truth in price, rather than attempting to parse the impossibly conflicted and intentionally obscured opinions of the commentariat. Technicians find meaning in the actual buying and selling activity happening today, not in the dusty old 10Q’s of 90 days ago or in the projected estimates being bandied about among the discounted cash-flow analysis crowd on the sell-side.

But above all, technicians respect the power of sentiment more than their fundamentalist counterparts. And sentiment, after all, is how valuations actually come to be – the P in the PE Ratio or the PEG Ratio or the P/B calculation. In the real equation, the only one that counts, the P is what pays, not the E, not the EG and certainly not the B. Buffett would tell you the B (book value) is what pays over time (the market going from a voting machine to a weighing machine). But Buffett can afford to ride it out, having permanent capital under management and an ocean of insurance premiums sloshing in over the transom every hour of the day. Most market players do not.

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