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Investing Guidelines
Business Tenets
W
e come now to the heart of the matter—the essence of Warren
Buffett’s way of thinking about investing. Warren Buffett is so
thoroughly identif ied with the stock market that even people
who have no interest in the market know his name and reputation.
Others, those who read the f inancial pages of the newspaper only casu-
ally, may know him as the head of an unusual company whose stock
sells for upward of $90,000 per share. And even the many new investors
who enthusiastically devote careful attention to market news think of
him primarily as a brilliant stock picker.
Few would deny that the world’s most famous and most successful
investor is indeed a brilliant stock picker. But that seriously understates
the case. His real gift is picking companies.I mean this in two senses:
First, Berkshire Hathaway, in addition to its famous stock portfolio,
owns many companies directly. Second, when considering new stock
purchases, Buffett looks at the underlying business as thoroughly as he
would if he were buying the whole company, using a set of basic prin-
ciples developed over many years. “When investing,” he says, “we view
ourselves as business analysts—not as market analysts, not as macro-
economic analysts, and not even as security analysts.”^1
If we go back through time and review all of Buffett’s purchases,
looking for the commonalities, we f ind a set of basic principles, or tenets,