Wednesday, 8 January 2014

The Great, Good and Gruesome Businesses of Buffett

Buy good quality companies with durable competitive advantage and trustworthy managers and holding them for the long term. Just buy them at fair or bargain prices and never at high prices.

"It is better to own the great companies at good prices, than the good companies at great prices."

Here is a nice table summarizing the great, good and gruesome companies according to Buffett.

Let me give you some pointers:

1. Select a small cap stock.

2. The one that you have the confidence that it will grow its revenues and earnings for many many years to come.

3. The one with some durable competitive advantage (it can be difficult in early years to notice or identify this).

4. Get into this early.

5. Continue to monitor its performance.

Yes, you can hold for the long term too.

For this you need to assess its quality (both qualitative and quantitative, and the management).

Don't be too focus on the price of the shares (the least important in your assessment).

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