Warren Buffett's 12 Principles

1. Don’t gamble.
2. Buy securities as cheaply as you can. Set up a “margin of safety.”
3. Buy what you know. Remain within your “circle of competence.”
4. Do your homework. Try to learn everything important about a company. That will help give you confidence.
5. Be a contrarian—when it’s called for.
6. Buy wonderful companies, “inevitables.”
7. Invest in companies run by people you admire.
8. Buy to hold and buy and hold. Don’t be a gunslinger.
9. Be businesslike. Don’t let sentiment cloud your judgment.
10. Learn from your mistakes.
11. Avoid the common mistakes that others make.
12. Don’t overdiversify. Use a rifle, not a shotgun.

The above is taken from chapter 7 of "Pick stocks like Warren Buffett"

Rule No. 2 (from Chapter 9):

- Look for companies with high and growing return on equity (ROE).
- Look for those rare companies with regular 15 percent growth in their earnings.
- Look for companies with high profit margins.
- Look for a company whose book value has been growing regularly.
- Buy companies without worrisome debt.
- Buy companies whose cash flow indicates that they are cheap in comparison to what they will be worth down the road. In short, their intrinsic value is high.