Tag: Valuation
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Am I overpaying?
The Quality Series · part 10 of 13 “Buy world-class businesses. Don’t overpay. Let compounding do the work.” That, in one line, is what I do. Most of this series so far has been about the first part. This one is about the second, and in my experience, it is the part most likely to…
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Why return on capital decides it
The Quality Series · part 6 of 13 Munger made a point I have never been able to improve on. If a business earns 6% on its capital over forty years and you hold it for forty years, you will not do much better than 6%, even if you bought it cheaply. If it earns…
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Where stock returns actually come from
The Quality Series · part 4 of 13 The return from owning a share comes from the growth in free cash flow per share, from a change in the multiple the market is willing to pay for that cash flow, or from a combination of the two. That is all. Everything else — the narrative,…
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From great business to great investment
The Quality Series · part 3 of 13 Why does linearity matter? Because it is the first link in a chain. A great business and a great investment are not the same thing, and the journey from one to the other has five links. I think about them in this order. Linearity. A world-class business…
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The whole idea, in one line
The Quality Series · part 1 of 13 People sometimes ask me, usually over dinner, what I actually do. The honest answer fits in one line: own shares in a small number of the finest businesses in the world, refuse to overpay for them, and have the patience to let compounding do the work. Each…