It mostly convinced us that Buffett's best advice for most people is still the simplest: own the market, keep costs low, and let time do the heavy lifting. Building a Buffett-Munger-style screener was useful, but mainly because it clarified where process ends and judgment begins.
This post walks through what we tried, what worked, what didn't, and what the exercise actually proved about individual stock picking versus owning the index. The screener spreadsheet is free — copy it below and run it on whatever universe you want.
The Idea
We set out to replicate Berkshire's process, not just its holdings. Buffett and Munger were never just buying cheap stocks; they were filtering relentlessly for durable businesses, understandable economics, and long-term resilience. "Buy a wonderful company at a fair price" — that's the actual mantra, and it's deceptively hard to operationalize.
So we built a two-stage stock screener using Perplexity Computer:
- Stage 1 — Quantitative filters. Profitability (ROE, ROIC), returns on capital, operating history (10+ years of positive earnings), balance-sheet strength (low debt-to-equity, healthy interest coverage), and free cash flow consistency.
- Stage 2 — Qualitative checklist. A scored approximation of Berkshire-style questions on moat durability, business simplicity, and technological vulnerability ("could a competitor with $10B disrupt this?").
The goal wasn't to publish a buy list. The goal was to see how much of Berkshire's process could actually be encoded — and where human judgment had to take over.
What a Screener Can Do
The quantitative part worked the way a Buffett-inspired process should. Hard filters are very good at saying no. They eliminated weak businesses, inconsistent earners, short-history companies, and balance sheets that didn't leave much room for error.
That matters because Buffett's edge has always started with elimination. His well-known guidance to ordinary investors is not to chase complexity but to own a very low-cost S&P 500 index fund, paired with short-term government bonds for stability — famously a 90/10 mix in the instructions for his own estate trust.
"Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. I believe the trust's long-term results from this policy will be superior to those attained by most investors who employ high-fee managers." — Warren Buffett, 2013 Berkshire Hathaway shareholder letter
In other words, even Buffett has long recognized that most investors do better by avoiding bad decisions than by trying to pick the next handful of market winners. A good screener can help you avoid bad decisions. It cannot, by itself, find the next handful of winners.
Where the Model Breaks
The harder part was trying to automate Berkshire's qualitative judgment. A screener can ask whether a company appears to have a moat, but it cannot truly understand whether customers are loyal out of habit, switching costs, brand attachment, regulation, or temporary convenience. A 5/5 "moat score" in a spreadsheet looks identical regardless of which of those is doing the work — even though they have wildly different durabilities.
It also cannot really judge management the way Buffett and Munger did. Reading numbers is one thing; understanding capital allocation, integrity, restraint, and behavior under pressure is something else entirely. Buffett's compounding edge has been at least as much about holding the right businesses for 30+ years as about buying them — and that holding decision is fundamentally a judgment about people.
That gap is why a machine can narrow the field but still struggle to identify the rare businesses that compound for decades. The final step is not a filter; it is judgment. And judgment doesn't backtest cleanly.
Why Picking Winners Is So Hard
There's a structural reason stock picking is harder than it looks — and it's worth sitting with the actual numbers.
Research by Arizona State University's Hendrik Bessembinder found that wealth creation in U.S. stocks is extremely concentrated. Over roughly 90 years of market history (1926 onward):
- Just 86 stocks accounted for half of all net wealth creation.
- The top ~1,000 stocks (~4%) accounted for all of the net wealth creation above 1-month T-bills.
- The remaining 96% of stocks collectively matched the return of one-month Treasury bills.
A tiny number of exceptional businesses drive the entire market's lifetime gains. Owning the index guarantees you hold them; picking individual stocks means trying to identify them in advance.
That is the uncomfortable math behind active investing. A small minority of stocks drive the market's lifetime gains, which means a screener isn't just trying to avoid losers — it's trying to identify the tiny set of exceptional businesses that matter most, before the rest of the market fully appreciates them.
That's also why broad indexing is so powerful. When the winners are so hard to identify in advance, owning the index is a practical way to make sure they are already in the portfolio when they emerge. SPIVA's data on professional fund managers tells the same story from a different angle: most full-time, well-resourced active managers can't beat the index over 15 years. A weekend screener is unlikely to do better.
What the Screener Is Actually Useful For
None of this means a Buffett-style screener is worthless. It means it's worth less than people pretend, and useful for different reasons than people assume. Here's where ours actually earned its keep:
1. Eliminating obvious junk
Negative ROE for 5 years? Debt-to-equity above 3? Operating losses? Out. The screener cleared roughly 80% of its starting universe in seconds — exactly the work Buffett's "circle of competence" rule does in his head.
2. Forcing structured thinking
Even if you ignore the final scores, having to score "moat durability" and "technological vulnerability" on every holding is a useful exercise. It surfaces holdings you've never actually defended on the merits.
3. Sanity-checking existing holdings
Run your current portfolio through Stage 1. If a stock you already own fails the quantitative filters, that's a prompt to actually re-read the thesis — not a sell signal, but a "do I still believe this?" reminder.
4. Sizing satellite positions
For investors who keep most of their portfolio in VTI and chill but maintain a small "fun money" sleeve for individual picks, a screener helps make sure that sleeve at least starts from quality, not stories.
What the screener is not useful for: replacing a diversified index portfolio. The minute you start running this kind of process and find yourself thinking "I bet I can identify the next handful of compounders," remember Bessembinder's 4%. That's the prior every individual stock has to overcome.
The More Useful Lesson
The real value of a Buffett-style screener isn't that it spits out a perfect buy list. Its value is that it helps shrink the universe, remove obvious junk, and force more discipline into the research process — including, often, the discipline to not buy individual names at all.
That's a balanced takeaway in the VTI & Chill spirit. Learning how Buffett and Munger filtered businesses is genuinely valuable. So is accepting Buffett's own advice that the average investor should keep it simple with 90% in a low-cost S&P 500 index fund and 10% in short-term government bonds.
There's a reason Buffett has repeatedly highlighted Jack Bogle's wisdom on low-cost indexing — going so far as to say Bogle had done more for the American investor than anyone else. Building better screens can make investors more thoughtful, but Bogle's message still lands the cleanest: own the market, keep fees low, stay disciplined, and stop pretending every portfolio needs to outsmart the world.
"If a statue is ever erected to honor the person who has done the most for American investors, the hands-down choice should be Jack Bogle." — Warren Buffett, 2016 Berkshire Hathaway shareholder letter
Try It Yourself
If you want to see how the screener filters work — or just steal the structure for your own research — copy the spreadsheet to your Google Drive. It's free, the formulas are open, and you can swap in any ticker universe you want (S&P 500, your watchlist, your existing holdings).
The Bottom Line
A Buffett-Munger-style screener can shrink the universe and force discipline, but it can't replicate the judgment that built Berkshire — and Bessembinder's research shows wealth creation is concentrated in roughly 4% of stocks, which makes "find the next compounder" a structurally hard game.
Use a screener to think more clearly, not to outsmart the market. For the bulk of your wealth, take Buffett at his word: a low-cost total market index fund, a small allocation to short-term Treasuries, automatic contributions, and time. The simple path is still the one with the best math.
Disclaimer: VTI & Chill provides financial EDUCATION, not personalized financial ADVICE. We are not licensed financial advisors. All content is for informational and educational purposes only. Past performance does not guarantee future results. Always do your own research and consider consulting a qualified financial professional before making investment decisions. All investing involves risk, including the possible loss of principal.