Principle 1: Safety of principal
Number 1 priority is to avoid permanent loss of capital.
Demand a high margin of safety in our investments to allow for errors and bad luck.
A reasonable degree of diversification also provides additional safety.

Principle 2: Business owners
We are business owners, not speculators flip-flopping pieces of paper to turn a quick profit.
Focus on understanding the business, especially the key factors that drive its long-term economics and thus its intrinsic value.
Don¡¯t care about short-term fluctuations in operating results or share price.

Principle 3: Investment targets
A business that we can understand.
A good business with a good management at a good price.
If a fair business is available for sale at a great price, we are also willing to invest.

Principle 4: Focus
¡°Put your eggs in a few baskets and watch them well.¡±
Given time and attention constraints, it is safer and more profitable to know a few things well than to know many things poorly.
Good investment ideas are few and hard to find. When we find them, we want to load up on them.

Principle 5: Patience & Discipline

We have the patience and discipline to wait until the odds are very much in our favour before we strike.
Otherwise, we are happy to sit on cash and do nothing.

Principle 6: Market fluctuations
Driven alternately by greed and fear, Mr. Market is famous for wild swings in his moods.
Ignore emotion-driven price fluctuations and focus on intrinsic value of the underlying business.
On his gloomy days, we are happy to buy from him more of the good businesses at better prices.
On his sunny days, we are happy to sell to him at fair prices.

Principle 7: Selling
We generally sell for 3 reasons:
  1 . when share price is close to intrinsic value.
  2 . when there are better opportunities.
  3 . when we realize that we¡¯ve made a mistake.
On some rare occasions when we have a very strong conviction that the market is likely to fall, we may also sell in order to raise our cash position.