Companies to Own

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

1. one that we can understand,
2. with favorable long-term prospects,
3. operated by honest and competent people, and
4. available at a very attractive price.

Good Business has:

1. 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.
2. 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.
3. low cost provider (in enormous market place).

by Warren Buffett