Berkshire Letter by Warren Buffett – 1994 (Part 6)
Mar 19th, 2007 by Martin Lee
Common Stock Investments
The number of companies where Berkshire had a stake of over $100 million continued to be low in number and simple in concept. The big investment ideas is summarised by Warren Buffett as:
“We like a business with enduring competitive advantages that is run by able and owner-oriented people. When these attributes exist, and when we can make purchases at sensible prices, it is hard to go wrong.”
The performance of an investment does not depend on the complexity of the investment. If you can evaluate correctly a company that is simple to understand and enduring, the result is the same if you had correctly analysed another complex investment alternative.
Rather than try to time his purchases, Warren Buffett will determine the fair value and buy when there is a margin of safety.
It is foolish to stop buying shares in an outstanding business whose long-term future is predictable, because of short-term concerns over the economy or stock market.
Also, before buying new investments, Warren will consider adding to old ones first. If a business is attractive in the past, it could still be in the present/future.
Incidently, quite a number of the purchases that Warren Buffett made for Berkshire are what similar to what he bought many years ago as a private investor.
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