Buffett describes how he invests in equities. 1. A business I can understand. Does this fit within my circle of competence. Can I Have a very high probability of predicting the earning power of this business will be in 15 years? 2. Economic castle and moat / competitive advantage / monopoly Coca-Cola is given as an example of the perfect product. Chocolate bars, candy bars, Cadbury’s, See’s Candies, also are discussed.