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The fundamental Stocks Investor Warren Buffett

Invest in the business 

It was Graham who taught Warren, instead of asking 
(a) in what security? and 
(b) at what price? to ask 

(a) in what enterprise? and 
(b) on what terms is the commitment proposed? 

Warren places a great amount of weight on the  quality of a company when he makes his investment decisions.  One way to determine the quality of management is to see what it does with its earnings. 

Does it pays out dividends, or retain them? 

If it pay out dividends, does it profitably employ them, or does it squander them on dreams of grandeur? 

He began to base his investment decisions on the economic nature of the business.  The excellent business with high rates of return on equity, identifiable consume monopoly and shareholder - oriented management became his primary target. 
 

Invest for the long terms

A depressed market makes it easier for our insurance companies to buy small pieces of wonderful businesses - including additional pieces of businesses we already own - at attractive prices. And third, some of those same wonderful businesses, such as Coca-Cola, are consistent buyers of their own shares, which means that they, and we, gain from the cheaper prices at which they can buy. 

Overall, Berkshire and its long-term shareholders benefit from a sinking stock market much as a regular purchaser of food benefits from declining food prices. So when the market plummets - as it will from time to time - neither panic nor mourn. It's good news for Berkshire. 

Warren Buffett Books from Amazon

The Essays of Warren Buffett : Lessons for Corporate America
The Warren Buffett Way: Investment Strategies of the World's Greatest Investor
How to Pick Stocks Like Warren Buffet: Profiting from the Bargain Hunting Strategies of the World's Greatest Value Investor
The Intelligent Investor: A Book of Practical Counsel
The Warren Buffett CEO: Secrets of the Berkshire Hathaway Managers
The New Buffettology: The Proven Techniques for Investing Successfully in Changing Markets That Have Made Warren Buffett the World's Most Famous Investor