Want to pick truly good companies in the stock market? Buffett's approach is actually not complicated; the core is to rely on financial report data to speak.

When it comes to stock selection, many people are easily confused by superficial good news. But old Buffett never does that. He looks at financial reports like a doctor examines a health check-up—every number reflects the company's true condition.

So, what indicators does he prioritize? First is gross profit margin, which should stay above 40%. This indicates that the company's core products or services are competitive and not engaged in low-price competition. Next, look at SG&A (selling, general, and administrative expenses), which should not exceed 30% of gross profit; too high means poor operational efficiency.

R&D investment is also important. Keeping it below 30% of gross profit is a reference line—investing too much without output is like burning money. Then, look at depreciation; less than 10% of gross profit indicates good asset quality. The final key indicator is interest; it should not exceed 15% of operating income—this reflects the company's debt pressure.

When these five indicators are considered together, you can have a clear judgment of a company's financial health. You don't need complex technical analysis; investment decisions rooted in financial report data are often more reliable.