1）The stocks that Warren invested in all have "durable competitive advantage". The key is its durability.

When we invest in real estate, we often talk about location, location and location. In real estate investing, the competitive advantage is a property's location, that's number one. Which areas in the US has long term durable competitiveness for real estate? In my opinion, it must have a healthy population growth, a strong future job growth prospect and a limited urban land supplies. The areas that fit this criteria is as follows:

1) New York City metro region
2) Silicon Valley metro region (or San Francisco)
3) Washington DC metro region (including Northern VA and suburban MD)
4) ... ( I don't want to fill in the blank because I am no longer sure who is next...)

Fortunately, most Chinese are wise enough to live in the above locations

NYC has durable comp advantage due to its financial expertise. Despite the recent slump, this advantage will not go away and when enough time is passed, it will come back strong. NYC being the most favorite social spot for the rich and famous other than Beverly Hill, it will have contiual flow of fresh money supply. It's pretty much like UK's London, it's never going to fade away as a center of importance, at least in our life time.

Silicon Valley will continue to remain as an innovative power center, were it not for software or silicon like in the past, it would be for biotech and green enough. Silicon valley has enough venture capital power that pretty ensure its future importance as innovative industrial center.

Washington DC is the capital of the country, the home city for the biggest company in the world, US government. US government would be last entity to collapse in the US, therefore, it has the safety net that would be as strong as a diamond. Further more, DC region is less and less government funding reliant, it's fast becoming a new Manhattan when the current speed of development can be maintained.

When you want to invest for some thing that's long term, like housing, you better find a location that will have a durable competitive advantage. Having said that, I am not saying that you won't get good investment return from other regions, but when money is limited and your strategy is small, you always go to the safest area for long term gain first. You avoid areas that's not proven and less certain.

2) Warren never buy stocks that's overpriced. Even for companies that have proven durable competative advantage, he would wait for the moment when the company is temporarily undervalued. The best example is his recent purchase of GE stock when it was near its all time low. He is very value sensitive.

For these cities that have long term competative advantage. Following Warren's logic, we only massively buy houses when their prices are low enough to justify a long term return. That means when their capital return ratio is out of whack, we skip them. We will wait for the crisis to happen so we can buy at the bottom price. My personal philosophy is to buy a low priced home near a competitive region. I would avoid buying a low priced home at a non-competitive region because their future return is less sure. In order to definitely define my location limitation, I have my 25 mile rule. I will only buy a house that's within 25 miles from a power center. For example, 25 miles from the White house or 25 miles from Standford University or 25 miles from Empire State Building. If it's 50 miles away, then all the competitive advantage may fade away, you end up buying a different location with a less competitive advantage.

Conclusion: The key for long term investment success is maintaining healthy gain by reducing risk. If you have a habbit of chasing a profit that always accompanied by high risk, you may be lucky for a while, but one of those blue moon days you will get burned and that would wipe out all your previous gain. That's why a lot of "smart" people never end up becoming as rich as Warren Buffett because their strategies have too much elements of non durability and subject to too much high risk. Warren Buffett's motto is: "The number one rule is don't lose money, the number 2 rule is remember rule number one". By finding an undervalued asset in a location that offers long term proven durability, how can you ever lose money?