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.
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