How does Buffett analyze a company? The essence of the old man: look for "three good students" in good industries (good business, good team, good price).

Buffett’s investment legend is not based on short-term speculation, but on a simple framework validated over a lifetime: buy shares of excellent companies and hold them as if you were buying the entire business. In good industries, look for the “Three Good Students”—good business (strong moat), good team (excellent management), and good price (reasonable valuation). He does not predict macro trends or chase hot topics; he only asks a few core questions: Can this company make money long-term? Is the moat solid? Is it expensive now? Below is the essence of Buffett’s analysis system, recommended for repeated review and collection.

Buffett’s Analysis Framework: 6 Core Dimensions

1. Industry Ceiling: Is the space large enough?

First, assess whether the industry has growth potential or how the company responds to saturation.

Core question: Is the company breaking through or adapting to the ceiling? What is its industry position?

2. Business Model: How does it make money? Can it be sustained?

Moat is Buffett’s favorite term—an advantage that makes it difficult for competitors to imitate.

Core: Is the model clear, and is the moat real and sustainable?

3. Core Competitiveness and Management Team: A good team makes an ordinary business excellent

Core: Moats are maintained by the team; good management is an invisible barrier.

4. Growth Potential: Will it be profitable in the future?

Look at data, not stories.

Emerging industries focus on demand potential; mature industries look at historical cycle performance.

5. Margin of Safety: Good companies also need good prices

Valuation is an art: buying a good company at a high price can still lead to losses.

Operate in tiers: buy at the low end of historical valuation range, reduce at the high end, avoid chasing absolute lows/highs.

6. Bottom and Top Signals: Patience for “mispricing”

• Davis Double Play/Double Kill: Buy at low PE + growth, sell at high PE + high growth
• Mainstream Bias: Extreme emotions (full bearish/bullish) are reversal signals
• Signs: Financial improvement, trading volume spikes, management buybacks, changes in margin trading

Buy good companies when they are expensive, hold when cheap—margin of safety is a protective umbrella.

Summary: The “Three Good” Traits of Quality Companies

The companies Buffett has bought throughout his life almost all meet:

• Good Business: large industry space, clear model, strong moat
• Good Team: excellent management, focus on core business, integrity and vision
• Good Price: reasonable valuation, sufficient margin of safety

The essence of investing: find “Three Good Students” in good industries, then hold patiently. It’s not about predicting short-term rises or falls, but about owning a part of excellent companies and growing with them.