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Buffett & Munger’s Four Investing Filters

A few takeaways:

  1. (Filter #1) The most important thing is to understand the business.
  2. (Filter #2) Look for a business with an enduring competitive advantage.
  3. (Filter #3) Invest with able and trustworthy managers.
  4. Filter out most prospective investments through inversion, i.e. businesses you don’t understand, businesses with lousy economics, etc.
  5. (Filter #4) Pay a price that makes sense and affords a margin of safety.

Mohnish Pabrai at Google

A few takeaways:

  1. There is a big difference between risk and uncertainty.
  2. When you own a stock you own part of business. Learn to think like an owner.
  3. Compounding is a powerful force.
  4. Don’t seek false precision.
  5. Try to isolate the handful of key variables that drive the business.
  6. You should be able to state your investment thesis in a few sentences.
  7. Patience is essential.
  8. Stay within your circle of competence.