M&A, quality management and avoiding 'idiots': The keys to picking the right stocks

Technology and performance key to finding 'winning' products

There is no value without quality. Benjamin Graham, back in the 1930s, was the first to recognise this. He observed that seemingly bargain stocks were often low-quality companies that ended up being value traps.

The key to investment success was buying cheap companies with quality characteristics. Warren Buffett, swayed by Charlie Munger, placed further importance on the quality of a business. It is easy to agree the quality of a company's management is vital to success or failure. Identifying what exemplifies quality is not so easy. Quality of management "I try to invest in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will." This is a well-known quote by Buffett that many investors have followed to the letter. Buffest has frequently cited the...