Tenets of the Warren Buffett Way Business Tenets Is the business simple and understandable? Does the business have a consistent operating history? Does the business have favorable long-term prospects? Management Tenets Is management rational? Is management candid with its shareholders? Does management resist the institutional imperative? Financial Tenets Focus on return on equity, not earnings per share. Calculate “owner earnings.” Look for companies with high profit margins. For every dollar retained, make sure the company has created at least one dollar of market value. Market Tenets What is
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