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Investing Guidelines
Value Tenets
A
ll the principles embodied in the tenets described so far lead to
one decision point: buying or not buying shares in a company.
At that point, any investor must weigh two factors: Is this com-
pany a good value, and is this a good time to buy it—that is, is the
price favorable?
The stock market establishes price. The investor determines value
after weighing all the known information about a company’s business,
management, and f inancial traits. Price and value are not necessarily
equal. As Warren Buffett often remarks, “Price is what you pay. Value
is what you get.”
If the stock market were truly eff icient, prices would instanta-
neously adjust to all available information. Of course, we know this
does not occur. Stock prices move above and below company values for
numerous reasons, not all of them logical.
It’s bad to go to bed at night thinking about the price of a
stock. We think about the value and company results; The
stock market is there to serve you, not instruct you.^1
WARRENBUFFETT, 2003