In his classic text The Intelligent Investor, Benjamin Graham asserts, "Investing is most prudent when it is most businesslike." If you remember those nine words, you'll be able to answer why you're making any investment.

If you look at XYZ Corp. and say, "It's selling at $5 a share, so it's a cheap investment," you're stuck in a speculative thought process. On the other hand, if you truly understand the business, you'll be able to summarize, in three to five sentences, the most fundamental reasons for why a stock is an attractive investment at its current price.

I always try to follow Graham's thought process when I'm looking at a company. Let me give you an example.

Buying oil for 75% off
In 2003, Chinese oil company PetroChina (NYSE:PTR) was selling for about $20-$30 per American Depositary Receipt, or roughly $45 billion. At that price, the company was on sale for about 25% of the asking price of ExxonMobil (NYSE:XOM), even though PetroChina was a cash gusher, earning almost 80% of the profits that ExxonMobil and other U.S. oil titans were making. On top of that, PetroChina was paying out 45% of its income in dividends each year, for a yield of 6%-7%. It didn't take a genius to realize that this was a fantastic business available for a good price.

The Berkshire blues
Yet all too often, smart people lose a lot of money because they invest based on share price and not business value. Many of us would rather own 1,000 shares of a $10 stock than 10 shares of a $1,000 stock.

Consider the case of Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B), a conglomerate of some of the world's most enduring businesses. Without even looking at the business, lots of people dismiss the company as too expensive because of the share price, which currently sits at around $107,000 for the "A" class and $3,500 for the "B" class. Yet value investor extraordinaire and Buffett disciple Mohnish Pabrai, in a recent Bloomberg interview, estimates a fair value of $150,000 per "A" share and $5,000 per "B" share and thinks Berkshire will return 15% per year.

That means you can purchase a piece of Warren Buffett's company at a substantial discount to intrinsic value, and if you buy now, according to Pabrai's estimate, you will earn above-market returns in the long run. No, you won't get the returns that Buffett generated during his 1950s Buffett Partnership years, but returns in the low to mid-teens are nothing to sneeze at when the market earns about 10% or so a year in the long run. And the best part is that your due diligence has been done for you every year since Buffett took over.

With even one share, you are getting a slice of a company with close to $100 billion of marketable securities, along with $30 billion or so in cash that's being invested by the world's greatest money manager. On top of this, you get a collection of businesses -- including NetJets, Shaw, Fruit of the Loom, Clayton Homes, and more -- that are earning money and will keep doing so for years to come. And you can own a part of this empire for only 1.5 times book value. An investing thesis doesn't get more compelling than that.

So even if you only have $10,000 to invest, know that a couple of shares of Berkshire "B" have more value than most companies that sell for much less. I won't deny that there are other smaller companies that will outperform Berkshire over the years, but unless you have the time to apply a deep level of intensity to researching investment ideas, why not give your money to the best capital allocator on the planet and one of the greatest investors ever, and let him do the work for you?

For more Foolishness, see "Warren Buffett's Priceless Investment Advice."

Berkshire Hathaway is both an Inside Value and a Stock Advisor selection. See why by taking either service for a free, 30-day trial run.

Fool contributor Sham Gad runs Gad Partners Fund, a value-centric investment partnership reminiscent of the 1950s Buffett Partnership. As of this writing, he has positions in Berkshire and PetroChina. You can reach him at The Fool has a straightforward, intelligent disclosure policy.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.