Warren Buffett's Ten Commandment

1. Don't overpay
2. Don't lose money
3. Cash combine with courage in crisis is priceless
4. Don't invest in things you don't understand
5. Don't try to catch a falling knife until you have a handle on the risk
6. Don't invest unless you trust the management
7. Is the company in an industry with good economics? That is, is it not in an industry competing on price?
8. Does the company have a consumer monopoly or brand name that commands loyalty?
9. Can anyone with an abundance of resources compete successfully with the company?
10. Are the earnings on an upward trend with good and consistent profit margins?
11. Is the debt-to-equity ratio low, or is the earnings-to-debt ratio high?
12. Can the company repay debt even in years when earnings are lower than average?
13. Does the company have high and consistent returns on invested capital?
14. Does the company retain earnings for growth?
15. Does the business have high maintenance cost of operations, high capital expenditure or investment cash outflow? (If so, that’s not good.)
16. Does the company reinvest earnings in good business opportunities?
17. Does management have a good track record of profiting from these investments?
18. Is the company free to adjust prices for inflation?