Keep INVESTING Simple and Safe (KISS) ****Investment Philosophy, Strategy and various Valuation Methods**** The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy. It’s true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!****Warren Buffett: Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1.
"You have to understand accounting and you have to understand the nuances of accounting. It's the language of business and it's an imperfect language, but unless you are willing to put in the effort to learn accounting - how to read and interpret financial statements - you really shouldn't select stocks yourself."
Warren Buffett
History of investment analysis
Benjamin Graham
Benjamin Graham had adopted early bond analysis techniques to common stocks analysis.
He focused primarily on determining a company's solvency and earning power for the purposes of bond analysis.
Graham never made the distinction between a company that held a long-term competitive advantage over its competitors and one that didn't.
He was only interested in whether or not the company had sufficient earning power to get it out of the economic trouble that sent its stock price spiraling downward.
He wasn't interested in owning a position in a company for ten or twenty years. If it didn't move after two years, he was out of it.
Warren Buffett
Warren Buffett discovered, after starting his career with Graham, the tremendous wealth-creating economics of a company that possessed a long-term competitive advantage over its competitors.
He realized that the longer you held one of these fantastic businesses, the richer it made you.
While Graham would have argued that these super businesses were overpriced, Warren realized that he didn't have to wait for the stock market to serve up a bargain price, that even if he paid a fair price, he could still get superrich off of those businesses.
Warren developed a unique set of analytical tools to help identify these special kinds of businesses.
His new ways of looking at things enabled him to determine whether the company could survive its current problems (recall Washington Post at the time when he first bought into this company).
Warren's way also told him whether or not the company in question possessed a long-term competitive advantage that would make him superrich over the long run.
Warren's two simple and stunning revelations:
(1) How to identify an exceptional company with a durable competitive advantage?
(2) How to value a company with a durable competitive advantage?