Tuesday, 9 April 2013

Warren Buffett - 4 Steps to Picking a Stock

1. You have to deal in things that you are capable of understanding.

2. Then once you're over that filter, you need to have a business with some intrinsic characteristics that give it a durable competitive advantage.

3. Then you should vastly prefer management in place with a lot of integrity and talent.

4. Finally, no matter how wonderful it is, it's not worth an infinite price, so you have to have a price that makes sense and gives a margin of safety considering the natural vicissitudes of life.

It's a very simple set of ideas. The reason that these ideas have not spread faster is they're too simple.

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