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.