Buffet's Wisdom

Your goal as an investor should be simply to purchase, at a rational price, a part interest in an easily understood business whose earnings are virtually certain to be materially higher, five, ten, and twenty years from now. Over time, you will find only a few companies that meet those standards—so when you see one that qualifies, you should buy a meaningful
amount of stock.

The basic ideas of investing are to look at stocks as businesses, use market f luctuations to your advantage, and seek a margin of safety. That's what Ben Graham taught us. A hundred years from now they will still be the cornerstones of investing

buying a stock for less than twothirds of net asset value and buying stocks with low P/E multiples—had a common characteristic.

firstly, market frequently mispriced stocks, usually because of the human emotions of fear and greed.
secondly, he quoted the poet Horace: "Many shall be restored that now are fallen, and many shall fall that now are in honor."

—the characteristic that most impressed Fisher was a company's ability to grow sales over the years at rates greater than the industry average. That growth, in turn, usually was a combination of two factors: a significant commitment to research and development, and an effective sales organization. A company could develop outstanding products and services but unless they were "expertly merchandised," the research and development effort would never translate into revenues.

market potential alone is only half the story; the other half is consistent profits. "All the sales growth in the world won't produce the right type of investment vehicle if, over the years, profits do not grow correspondingly,"

Graham: 1. Dividend Pay Record 2. Stable Earning Record 3. Asset