WARREN BUFFETT'S INVESTMENT PRINCIPLESWarren Buffett does not readily disclose the investments he makes on behalf of himself or Berkshire Hathaway. He does, every year, report on the substantial holdings of his company in other corporations. These provide only tiny clues however to why, when and where he invests.He is prepared, however, and does so regularly, to outline general principles of sound investment. These have a consistent theme and can be summed up like this.Stock investments should be looked at in the same way as buying a business. The stock investor is really buying a tiny share or partnership and should apply the same principles that they would in buying a business the Benjamin Graham approach:1. The company should be soundly managed. Tests of good management include:Share buybacksGood use of retained earningsSticking to what you know2. The company has demonstrated earning capacity with a likelihood that this will continue. Tests of earning capacity include:Company growthDealing with inflationCapital expenditureLook through earningsBrand names3. The company should have consistently high returns. Warren Buffett would look at both:Returns on equityReturns on capital4. The company should have a prudent approach to debt.5. The businesses of the company should be simple and the investor should have an understanding of the company.See case studies6. Assuming that all these thresholds are satisfied, the investment should only be made at a reasonable price, with a margin of safety. This is always a matter for independent judgment by the investor but it is relevant to consider:Price/earnings ratiosEarnings and Dividend yieldsBook valueComparative rates of return8. Investors need to take a long term approach.