“Never depend on a single income. Make an investment to create a second source.”  Warren Buffett

Stick to companies you understand: Warren Buffett invests in businesses he thoroughly understands. He does not invest in technology companies or complicated businesses, sticking mainly to consumer brands, insurance, and banks.

Look for enduring competitive advantages: Buffett seeks out companies with strong brands, loyal customers, network effects, cost advantages, or patents that give them a durable edge over competitors. He calls these "economic moats" that defend a business.

Consider the strength of management: Buffett wants shareholder-oriented management teams with proven track records of smart capital allocation and long-term growth creation. He meets directly with managers to gauge their business strategy and talent.

Buy at a discount: Unlike most investors, Buffett searches for strong companies that are currently trading at a discount to their intrinsic value for reasons unrelated to their long-term potential. Temporary bad news often creates buying opportunities for him.

Hold for the long run: Once Buffett makes an investment, he is not afraid to hold stocks for 10, 20 or even 50 years. He does not panic and sell during bear markets. His long investment horizon allows the power of compounding to work its magic.

Diversify across industries: Buffett owns a wide variety of businesses from various industries like insurance, banking, consumer products, utilities, manufacturing and energy. This diversification creates stability in his portfolio.

Reinvest dividends for compound growth: Rather than paying out dividends to shareholders, Buffett prefers companies that reinvest excess profits into further growth, thereby compounding shareholder value over decades. The reinvested earnings can deliver exponential returns.

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