Carmel E.

Apurado FIN 101

BSA 1_4 3016

Insights about the Seven Principles of Investing by Warren Buffet

The Seven Principles of Investing are:

 Managers must have integrity and talent
 Invest by facts not emotions
 Buy wonderful businesses not ‘cigar butts’
 Only buy stocks that you understand
 When you see great opportunity, take it!
 Don’t sell unless the business fundamentally changes
 Buy at a price below intrinsic value

My understanding about the first principle of Warren Buffet is that it emphasizes the importance of
investing in companies led by trustworthy and skilled managers. Integrity ensures ethical decision-
making, while talent enables effective execution of business strategies. The second principle is advises
investors to base their investment decisions on objective information and analysis rather than being
swayed by emotional factors such as fear or greed. Relying on facts and data helps reduce the impact of
biases. Next principle suggests investing in high-quality companies with strong fundamentals and
competitive advantages, rather than settling for distressed or undervalued businesses that may have
limited long-term potential. The fourth principle is about encourages investors to focus on businesses and
industries they have a good understanding of. By investing in companies they comprehend, investors can
make more informed decisions and assess risks effectively. Fifth principle is highlights the importance of
recognizing and acting upon attractive investment opportunities. It encourages investors to seize favorable
moments when they arise, as timing can be crucial in achieving investment success. Then the sixth
principle suggests holding onto investments unless there is a significant change in the underlying
fundamentals of the business. It promotes a long-term perspective and discourages making impulsive
selling decisions based on short-term fluctuations. Lastly, this principle advocates for purchasing stocks at
a price that is lower than their estimated intrinsic value. It involves conducting thorough analysis to
determine the underlying value of a business and seeking opportunities where the market price offers a
margin of safety.

These principles emphasize the importance of ethical leadership, rational decision-making,

investing in quality companies, understanding investments, seizing opportunities, taking a long-term
perspective, and seeking value in the market. Following these principles can help investors make
informed decisions and increase their chances of long-term investment success.