Buffettology

Among the most important laws that Buffett learned:

1) It is far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

2) When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.

3) Management does better by avoiding dragons, not slaying them.

4) As if governed by Newton’s first law of motion, an institution will resist any change in its current direction.

5) Just as work expands to fill available time, corporate projects or acquisitions will materialize to soak up available funds.

6) Any business craving of the leader, however foolish, will be quickly supported by detailed rate of return and strategic studies prepared by troops.

7) The behavior of peer companies, whether they are expanding, acquiring, setting compensation, or whatever, will be mindless imitated.

8) It is not a sin to miss a business opportunity outside one’s area of expertise.

9) If your actions are sensible, you are certain to get good results.

10) Do not join with managers who lack admirable qualities, no matter how attractive the prospects of their business.

11) Fearful when others are greedy, greedy when others are fearful.

12) First investment rule: do not lose money, second rule: don’t forget the first rule.