Post of the Day: Great Businesses According to Buffett

Today's post of the day is from George at Fat Pitch Financials:

I finished digesting the latest Berkshire Hathaway 2007 letter to shareholders today. I found the most interesting part of this year’s letter was Warren Buffett’s discussion of what kinds of businesses turn him on.

The companies that he and Charlie Munger look for are:

  1. Understandable
  2. Businesses with favorable long-term economics
  3. Run by trustworthy management
  4. Selling at sensible prices
Mr. Buffett once again reiterates that “a truly great business must have an enduring ‘moat’ that protects excellent returns on invested capital.” Fat Pitch Financials has been all about finding companies with wide moats ever since I first set up this blog in 2004. Given my economics background, I find Buffett’s arguement for the need for wide moats compelling. He argues that companies that lack a barrier to competition will succumb to the competitive forces of a capitalist market that tend to drive profits to zero."
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2 comments:

Free From Broke said...

People wonder how Buffett is such a great investor and time and time again it's due to his simple logic in picking companies.

Nick said...

Absolutely, he is gifted in making difficult topics seem simple. Thanks for stopping by.