In 1977, Buffett summarized for the first time the criteria he follows when selecting quality companies in his letter to shareholders.

These standards have been used ever since, with only four core principles.
Within his circle of competence, he understands the business.
The company has a long-term competitive advantage, able to withstand competition and maintain its defenses.
The management team is capable and honest, aligned with shareholders' interests.
The price must not be too outrageous; it should be bought at a reasonable or even cheap valuation.