How to Invest in a Business Venture: Warren Buffett on What to Look for When Investing and What Makes a Great Manager

Warren Buffett explained how his company, Berkshire Hathaway, selected businesses to invest in. According to Buffett, it is all about looking at past performance and the quality of the management team:

We do look for intelligence, energy and integrity. Our managers overwhelmingly come with the businesses that we buy, so we have the chance to look at what they've done over twenty or thirty, forty years and we can see their abilities just as if you were hiring soccer players and you had the chance to see how they performed over the previous ten years, you would know what you were getting. I would not be able to do as well in evaluating managers if I were to select, we'll say, from a class of a hundred MBAs. I would not know that much about their... I would know they're pretty smart or they wouldn't be there. And I'd know that they all had energy, but I wouldn't have the track record that I get when we buy a business. When we buy a business, we're looking at a management that's been there for a long time. We can see their performance, we can see how they've behaved in difficult situations. We can see how they've treated their employees and customers, and we can get a very good reading on them.

Warren Buffett Teaches You How to Invest: The Stock Market for the Average Investor

Simple, easy-to-understand advice from the greatest investor of all-time. In an interview, Buffett explained a stock market strategy for the average investor without advanced financial knowledge:

I would recommend that they put a similar sum then maybe they'd be earning more as they went along. But save something every month and basically put it in an index fund. They are not in a position to make judgments on stocks themselves, they're not in the game any more than I can prescribe medicine or something of the sort. They will get a good result. The American economy has done wonderfully. I mean, if you take the 20th century, the Dow started at 66 and it ended at 11,400. Now think of that. How could anybody get a bad result investing starting at 66 and 11,400? But a lot of people do because they jump in at the wrong time or they think they know this stock versus that stock. But the average person should just consistently buy equities, which to me are by far the most attractive investment choice around and put it in, and if they do that for twenty or thirty years, they'll do very well.