I thought I'd start a thread to discuss the pros and cons of Buffett-style investing. Most people are familiar with it, but I'll just recap the main elements of his approach: 1) Buy a stock looking at it as a fractional ownership of a business, not for reasons such as what the price has done, volume, technicals, sentiment etc. 2) Only buy a business you understand. You should have a high degree of confidence that the business will be around in 10 years and be operating just as good or better than it is now. 3) Buy excellent businesses/stocks which have very good economics and long-term prospects, usually based on some kind of "moat" (e.g. strong brand, lowest costs, patents, high quality product & service etc) which protects them from competition and allows above-average returns on capital. If you buy a good business, then unless you paid a very expensive price, in the long-run you should do well. 4) Buy businesses run by competent, honest management who are focused on shareholder value 5) Prefer great businesses at reasonable prices, rather than average or poor businesses at low prices 6) Ideally hold the stock for as long as possible, don't sell just because the price has gone up. Ignore market fluctuations except if an extremely attractive price is being offered for your stock. 7) Don't diversify. Your 10th best idea will not be as good as your best idea. Concentrate your bets on less than 10 main positions, overweighting your favourite position. 8) Have an extreme focus on risk control, by purchasing at attractive prices, and concentrating only on the highest quality, most predictable businesses. Aim to never make a permanent capital loss (as opposed to short-term quotational loss) on any investment. 9) Only focus on what is important and knowable. Do not waste time on unimportant things, or trying to figure out things that are essentially impossible (in his view) to predict. Thus, ignore forecasts for the economy, interest rates and so on when making your business investments. If it makes sense now, go ahead and don't let fears of the future put you off. Let me know if I've missed any points. The way I see Buffett as different to most investors is his focus on predictability, and business quality. Value investors often buy average businesses at what they think is an attractive price. Buffett seems to pass up *many* average businesses even at attractive prices. And unlike growth investors, he will stay away from businesses that have a high level of operational risk or uncertainty (e.g. a lot of technology or internet companies).