The essence of Buffett’s investment process is putting out cash after careful consideration of the facts with the expectation of a reasonable (or better yet, unreasonable) return. He sees this as fundamentally different from speculation where the emphasis is not on what an investment is intrinsically worth but on what the next person will pay for it. Buffett does not think that there is anything wrong with speculating per se; it’s simply a game he chooses not to play.

At the center of Buffett’s investment process is the ability to value an asset. To do this requires that you answer only three questions:

巴菲特投资过程的核心是评估资产的能力。如此做法只要求你回答三个问题：

１、How certain are you that your investment will produce cash?

你的投资会产生现金的确定性有多大？

２、How much cash will it produce and when will it be paid?

会产生多少现金，何时会得到偿付？

３、What is the risk free interest rate? Buffett uses the yield on long-term treasury bonds for the risk free interest rate.

无风险利率是多少？巴菲特用长期国债的收益率当作无风险利率。

Buffett teaches that this basic framework is immutable and can be used to value any type of asset – farms, oil royalties, stocks, bonds, lottery tickets and manufacturing plants. An investor can use this framework to evaluate all available assets and then invest in the one that is the cheapest, that is, the one that that offers the most value for the dollars invested.

巴菲特教导说，这个基本框架是永恒的，可以用于各类资产——农庄、oil royalties、股票、债券、彩票和工厂。投资者可以这个框架来评价所有的资产资产，然后投资于其中最便宜的一个。

For an investment grade bond, making this calculation of value is easy, because the bond generates a fixed coupon that is contractually bound to be paid on a fixed schedule. However, when valuing a business, it is the investor’s job to estimate the amount and timing of cash that the business will produce. This is an inherently imprecise process, yet it can be very useful.

作为一种风险债券(grade bond）投资，作这样的计算是容易的，因为债券产生固定利息，可以定期得到回报。然而，估价一个企业，投资者却要自己去估算企业能够产生的现金的数量和时间。这本身是一个不很精确的过程，但却非常有用。

Even if an investor can only come up with a range of values for a prospective investment, such a range of values may allow the investor to make a profitable investment if the investment can be purchased at a price below those values. For example, if your best appraisal of a real estate investment was very imprecise, for example, that the property was worth between $1 million and $2 million, that estimate would still be very useful if you could purchase the property for $700,000.

即使一个投资者对一个预期投资算出一个价值范围，也只有在低于这个价值时买入，投资者才能赚到利润。例如，你非常不精确地估价一个房地产投资，价值在１００万和２００万之间，如果在７０万以下购买这个房产，这个估测还是比较有用的。

Valuation is not primarily a question of how precise it is, but rather how certain it is, and whether you can purchase the asset cheaper than the lowest reasonable estimate of value. That is why Buffett’s first question is about certainty. Buffett thinks about risk first and will not invest in a business that he does not understand or that is subject to a lot of change because it makes the analysis of value impossible. Buffett once quipped that if he were teaching a class on investing, the final exam would include asking students to value an Internet company. Anyone who tried to answer the question would be flunked. It is simply too hard to value a business that is not producing cash in an industry where it could be obsolete in a year or two.

估值的问题不在于有多精确，而在于其确定性，在资产价格低于最低的合理估值时，是否你会购买。这就是为什么巴菲特的第一个问题是有关确定性的。巴菲特认为风险第一，他不会投资于他不理解或者受很多变化影响的企业，因为这会使价值分析变为不可能。巴菲特曾开过玩笑，如果他开一门投资课，期末考试会考学生们一个估价网络公司的题目。任何试图回答这个问题的人都会被当掉。估价一个不产生现金的企业太难了，也许一两年企业都不会有什么发展。

This is why Buffett looks for companies that have a durable competitive advantage – what Buffett calls a moat – because these types of businesses have predictable cash flows. The best evidence that a moat exists is a business that is profitably doing pretty much the same thing today that it was doing ten years ago, generates high returns on invested capital and is unlikely to succumb to the forces of creative destruction in the foreseeable future. Buffett looks for strong management that will work diligently to deepen the moat or, at least, work hard to minimize the effect of any forces that are eroding it. He also wants a business where management’s interests are aligned with those of shareholders. Even a business with strong predictable cash flows can be a poor investment if management is egregiously compensated or is prone to making poor capital allocation decisions.

这就是为什么巴菲特要寻找具有持续性竞争优势的公司——巴菲特称之为护城河——因为这样的企业具有可预测性的现金流。护城河存在的最好的证据是，一家企业如今像十年前一样利润丰厚，产生高的ROIC，在可预见的未来，不可能被创造性破坏的力量所摧毁。巴菲特寻找工作勤奋的强大管理层来拓宽护城河，或者，至少努力工作把破坏护城河的力量减至最小。他也喜欢那些把管理层利益和股东利益绑在一起的企业。即使一家企业具有非常强的可预测现金流收入，如果管理层贪婪地提高薪水，或者倾向于做错误的资本配置决策，那这个投资也是不好的。

If an investment fails to meet his standard of certainty, Buffett is happy to walk away. If he doesn’t understand a business or it is in an industry subject to rapid change, he won’t invest, knowing that to do so would be speculating. Buffett’s investing process is grounded in common sense and uncommon wisdom.

如果一个投资不能满足于确定性的标准，巴菲特会很高兴地走开。如果他不理解一家企业或者行业属于快速变化型的，他不会投资，这属于投机。巴菲特的投资过程是基于寻常的常识和不寻常的智慧。

Buffett argues that the approach you should take to investing in public companies through fractional ownership via the stock market is precisely the process you would use if you were looking to purchase a private business in a small town, for example, a gas station or a lawn care business. You would first examine the business and its competitive position to reach a judgment about how stable the business was, whether it could be expected to prosper and grow or decline under the weight of increased competition, changing demographics, or whatever other factors would impact the business’s prospects. This is the certainty factor.

巴菲特讲，投资于股票市场中的公众公司与你要在一个小城市里购买一个私有企业，比如说气站和草坪护理企业，的过程是一模一样的。你首先考查企业和它的竞争位置来判断这家企业的是否稳定，在越来越多的竞争压力下，变化的人口状况下，它会繁荣成长还是会衰败。还有其它什么因素会影响企业的未来。这就是确定性因素。

You would then try to estimate how much cash the business would generate over its lifetime, taking fully into account the capital expenditures you would need to make to maintain and grow the business. You would then estimate the timing of the free cash and discount it back by the risk free rate of return to arrive at an estimate of (maximum) value of the business – what Buffett’s call intrinsic value. The final step would be to compare this value to the asking price and make a decision.

然后你试着估算一下企业终生会产生多少现金，对维护企业成长的资本支出也进行彻底的计算。你再估算现金流的时间范围，按回报率折现，就能得出一个企业最大限度的估值——这就是巴菲特说的内在价值。最后一步是把这个价值与卖价比较，再进行决策。

Most investors would intuitively do these steps if buying a private business, yet, when many of these same investors consider buying a stock, they spend their time looking a host of factors that having little or nothing to do with the value of the business. They forget that a stock is not a piece of paper but fractional ownership in a business. Over time, the economic success – or failure – of the business will govern the results they achieve.

许多投资者在购买一家私人企业的时候也会本能的遵循这些步骤，当同是这些投资者在考虑买入股票的时候，看的却都是那些与企业价值很少或没有关系的因素。随着时间流逝，企业经济上的成功与失败才会影响最终的结果。

Finally, unlike many valuation practitioners, Buffett does not use a higher interest rate to compensate for uncertainty in a prospective investment. To him, the thought process is binary: either an investment has the required level of certainty of it does not.This assessment starts with a judgment of whether the business is within your circle of competence and if you can make a reasonably sure assessment of the business’s future prospects after consideration of the facts. Buffett does not think it makes sense to compensate for uncertainty by raising the discount rate in your calculation of intrinsic value.

最后，不像许多投资者，巴菲特不采用较高的利息率来弥补预测投资的不确定性。对他来讲，思维过程是二元的：一个投资具有要求的确定性水平或者不具有。这个评价开始于这个企业是否处于你的能力圈内，经过对事实的思考，你是否能对企业的未来前景有一个合理确定的评价。巴菲特认为，在你计算内在价值时，用提高折现率的方法来弥补不确定性是没有意义的。

Buffett’s investing framework can be used to value all assets including the general stock market. The long term driver of the stock market’s total return is corporate profits. Certainly there are other factors at play such as investor sentiment and interest rates, but in the long-term it is the underlying performance of the businesses that make up the stock market that will determine the long-term performance of the stock market. In the long-run, you cannot expect the stock market to return in aggregate results that are greater than those of these underlying businesses.

巴菲特的投资框架可以被用于评估所有的资产，包括整体的股票市场。股票市场总回报的长期驱动力是公司利润。当然起作用的还有其它因素，如投资者的情绪和利率，但长期来看，企业的潜在业绩才会真正影响股票市场的表现。从长期来讲，你不能期望股票市场的累积回报会超过所有企业的业绩表现。

Buffett’s approach to beating the market is a combination of buying stocks that are cheaper than the general market and that are growing intrinsic value faster the general market. In both cases, Buffett looks to get more value for his investments than he could get by investing those same dollars in an index fund. Wash, rinse, repeat. Buffett has been using this same playbook to consistently trounce the market for over fifty years.

巴菲特战胜市场的方法是如下的结合——买入比总的市场便宜，内在价值比总是市场成长得快。在这两个例子中，巴菲特追求比投入指数基金获得更多的价值。洗一洗，投一投，如此重复。巴菲特就用此一招连续痛击市场５０年！