How would Warren invest in a bakery?

As a general rule Warren would invest in a number of different bakeries. In order to stay true to his primary goal of protecting the principal, Warren would surely diversify.  As with people working at a bakery example, having a high certainty of bakery’s continued operation, even when some people choose to stop working at the bakery all together.  Same idea should work for Warren’s investment diversification.  Even if some bakeries will close their doors forever, Warren can still sleep well at night. Knowing with a high degree of certainty, as long as people will continue to consume baked goods, Warren’s investment in other bakeries will continue to provide those goods.

To decrease his chances of picking a bakery that fails, Warren would sift through all financial and other business related information available to him, contact people in a bakery business, major customers and suppliers for the purpose of determining his comfort level in picking a reasonably good bakery to invest in.  This research process will be repeated for every bakery Warren will invest in. This research process will be improved with time as Warren learns from every bakery investment he makes.

Revealing that “bakery” is really an equity position in any company should be no surprise here.  To be more specific we’re talking about any equity and equity based standardized derivatives traded on equity exchanges throughout the world. We will limit our focus to strictly US equities, without restricting any ideas discussed from being applied anywhere.