Modeling Buffett's Brains Using Validea’s Model

Take one investing genius. Add some great quantitative skills and a desire to make money in the stock market.

What do you get?

Ongoing efforts to use computers and stats to model the investing genius Warren Buffett, so that it can be replicated.

One recent attempt getting a lot of buzz in investing circles attributes Buffett’s success to his focus on:

1) Finding cheap, safe, high-quality companies;

2) The use of leverage (about 1.6 to 1) to juice returns.

Definitions are in order. “Safe,” according to this study by AQR Capital Management, means low beta and low volatility. “Cheap” means low price-to-book ratios. And high-quality means companies that are profitable,...