The first rule: the principle of competitive advantage
Good companies have good stocks: those big companies with clear business and excellent performance, which are run by a group of management with extraordinary ability and considering the interests of shareholders, are good companies.
Rule 2: Cash flow principle
Value evaluation is both art and science. Discounted value of enterprise's future cash flow
Buffett mainly uses the rate of return on shareholders' equity and the growth rate of book value to analyze the future sustainable profitability.
Rule 3: The principle of "Mr. Market"
Greed when others are afraid, and fear when others are greedy.
The law of value in the market: it is often ineffective in the short term, but it is often effective in the long term.
The fourth law: the principle of margin of safety
The margin of safety is "buying insurance": the more insurance, the less likely it is to lose money.
The fifth law: the principle of concentrated investment
Centralized investment is monogamy: the best, the most understanding and the least risk.
Sixth Law: Long-term Holding Principle
Long-term holding is a tortoise-rabbit race: compound interest can overcome everything for a long time.