We select our marketable equity securities in much the same way we would evaluate a business for acquisition in its entirety. We want the business to be
- one that we can understand,
- with favorable long-term prospects,
- operated by honest and competent people, and
- available at a very attractive price.
Good Business has:
- an ability to increase prices rather easily (even when product demand is flat and capacity is not fully utilized) without fear of significant loss of either market share or unit volume.
- an ability to accommodate large dollar volume increases in business (often produced by inflation than by real growth) with only minor additional investment of capital.
- low cost provider (in enormous market place).
by Warren Buffett