The Essential Buffett: Timeless Principles For the New Economy
by Robert G. Hagstrom
"The reasonable man adapts himself to the world, the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man" - Bernard Shaw
Buffett's four-part investment strategy:
1. Analyze a stock as a business
2. Demand a margin of saftey for each purchase
3. Manage a focus portifolio
4. Protect yourself from the speculative and emotional forces of the market
Tenets of the Warren Buffett Way
Business Tenets
1. Is the business simple and understandable?
2. Does the business have a consistent operating history?
3. Does the busines have favorable long-term propects?
Management Tenets
1. Is management rational?
2. Is management candid with its shareholders?
3. Does management resist the institutional imperative?
Financial Tenets
1. Focus on return on equity, not earning per share.
2. Calculate "owner earnings"
3. Look for companies with high profit margins
4. For every dollar retained, make sure the company has created at least one dollar of market value.
Makret Tenets
1. What is the value of the business?
2. Can the business be purchased at a significant discount to its value?
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