The ideal business is one that earns very high returns on capital and that keeps using lots of capital at those high returns. That becomes a compounding machine.
Interpretation
A successful business consistently generates high returns on investment while reinvesting profits for further growth.
Warren Buffett's quote emphasizes the importance of businesses that not only achieve substantial returns on capital but also continue to reinvest their earnings to generate even more growth. This creates a compounding effect, where both the initial investment and the reinvested profits work together to exponentially increase the value of the business over time, ultimately leading to sustained financial success.
In practice
In a business seminar when discussing investment strategies.
I have no views as to where it will be, but the one thing I can tell you is it won't do anything between now and then except look at you. Whereas, you know, Coca-Cola (KO) will be making money, and I think Wells Fargo (WFC) will be making a lot of money and there will be a lot - and it's a lot - it's a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that.
If the world couldn't see your results, would you rather be thought of as the world's greatest investor but in reality have the world's worst record? Or be thought of as the world's worst investor when you were actually the best?
Cash never makes us happy, but it's better to have the money burning a hole in Berkshire's pocket than resting comfortably in someone else's.
I think you should read everything you can. In my case, by the age of 10, I'd read every book in the Omaha public library about investing, some twice. _x000D_ You need to fill your mind with various competing thoughts and decide which make sense.
The most common cause of low prices is pessimism - some times pervasive, some times specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It's optimism that is the enemy of the rational buyer.
Oneβs objective should be to get it right, get it quick, get it out and get it over. Your problem wonβt improve with age.
Now, I am perfectly willing to just enjoy my career by choosing roles simply because I consider them to be a challenge and doing the best possible job I can.
I won at every level - all the way since I started playing the game of basketball at nine. I've won at every level, won championships at every level. And, you know, it won't be fulfilled until I win at the highest level.
The only yardstick for success our society has is being a champion. No one remembers anything else.
Work only on problems that are manifestly important and seem to be nearly impossible to solve. That way you will have a natural market for your product and no competition.
I think I could go away tomorrow. I've already accomplished something. It's such a selfish business that sometimes I get sick of myself.
Much of our American progress has been the product of the individual who had an idea; pursued it; fashioned it; tenaciously clung to it against all odds; and then produced it, sold it, and profited from it.
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