1. We are conservative value investors:
It is always our aim to buy securities in companies for less than intrinsic value. By working out what a company is worth and comparing it the market price, large long-term gains can be realized at a lower level of risk.
Hence we emphasize margin of safety in all our investments. It is not sufficient for a security to be trading at a small fraction below what we think it is worth. There must be a large enough discount so that if our intrinsic value estimate is over-stated we still face minimal capital loss.
2. We believe investing is most intelligent when it is most business-like:
Through a professional research-oriented approach, we invest only where the odds are in our favor. We try to remain intelligent in our stock picks and ignore fads or popular talk. Rather, we approach each investment as if we were buying the entire company.
3. We take no large risks:
We do not sell short, use leverage or trade on margin. There is no risk of capital loss greater than the amount we invest. The biggest risk any investor faces is the permanent loss of capital. It is almost impossible to recover from this situation, and any investment mechanism that increases the probability of loss is too risky.
4. We believe that price is what you pay; value is what you get:
This is probably the most important investment tenet out there. The best investors can easily distinguish between price and value, and hence pay little attention to short-term market fluctuations.
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