Wal-Mart Stores, Inc. (WMT), International Business Machines Corp. (IBM): What Warren Buffett Is Buying and What I am Buying

3 factors to consider

1. Risk and return:  Warren Buffett tends to invest in blue-chip favorites.  Those companies tend to grow earnings at a predictable and healthy 5-7%.  They are low-to-moderate risk companies that offer modest returns.
2. Investor’s willingness to pay:  At the end of the day a stock price is determined by the last price that somebody paid.  Warren Buffett tends to avoid companies that are difficult to value according to standard valuation metrics such as internet companies.
3. Growth potential:  Many of the companies which Warren Buffett likes have sound business models and iconic brands, but limited potential for growth.

My Foolish take

Of the companies mentioned above, none of them are showing up on my radar.  Although I feel that investors who have a low risk tolerance should consider these stocks rather than bonds or treasury bills given the low interest rate environment, I would prefer to invest overseas given that the U.S. market is very pricey.  Right now the companies that I highlighted in Bargain Hunting In Brazil look especially enticing, particularly given that there was a plethora of bad news about Brazil over the past few weeks that sent many Brazilian companies down well below fair value.