Investing Wisdom Series 6: Tenets of Warren Buffett Way [3 Mins]

Business Tenets:

  • Is the business simple and understandable?

  • Does the business have a consistent operating history?

  • Does the business have favorable long-term prospects?

Management Tenets:

  • Is management rational?

  • Is management candid with its shareholders?

  • Does management resist the institutional imperative?

Financial Tenets:

  • Focus on return on equity, not earnings per share

  • Calculate “owner earnings”

  • Look for companies with high profit margins

  • For every dollar retained, make sure the company has created [or can create] at least one dollar of market value

Market Tenets:

  • What is the value of the business?

  • Can the business be purchased at a significant discount from its value?

Finally Buffett – Is it a good Investment?

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