원문 보기
And I learned a good lesson right away. Uh in my first decade in the business, which is it's not what you buy, it's what you pay. That counts. Good investing doesn't come from buying good things. It from comes from buying things well. And you have to understand that the difference is more than grammatical.
And there is no asset which is so good that it can't become overpriced and dangerous. And there are very few assets which are so bad that if they get cheap enough, they can't be a good buy. So those were the lessons that I learned in my first decade and they have stood me in very good stead ever since.
Well, intrinsic value is what is the number that if you were all knowing about the future and could predict all the cash that a a business would give you between now and judgement day discounted at the proper discount rate that number is what the intrinsic value of business is. In other words the only reason for making investment laying out money now is to get more money later on, right?
That's that's what investing is all about. Now, when you look at a stock when you look at a bond assuming it's a United States government bond, it's very easy to tell what you're going to get back. It says it right on the bond. It says when you get the interest payments, it says when you get the principal.
So, it's very easy to figure out the value of a bond. It can change tomorrow if interest rates change, but you are the cash flows are printed on the bond. The cash flows aren't printed on a stock certificate. That's the job of the analyst is to print out change that stock certificate which represents an interest in the business.
So, the people who did not invest in growth stocks called themselves value. And and and value came to be kind of uh you know, a firm bifurcation. These are growth stocks, they grow faster than the average company. These are value stocks, they're cheaper than the average company. So, that became the dichotomy.
And and uh so, uh you know, these things kind of harden, calcify. And growth stock investing came to be identified with uh kind of prosaic companies, which are not attractive on the face because of their potential. They're mundane or slow growing or traditional, but because they're not sexy, they sell at low prices.
And they're they're better value. And so, some people buy the growth stocks, some people buy the value stocks. So, when we say economic moat, you might think of the old moat around a castle and that protected it from barbarians who want to plunder its treasure. Well, it's really the same concept with a business.
All businesses, profitable ones anyways, attract competition. And moats, basically economic moats, protect them from the competition that wants to move into their profit pool. If you look over long spans of time, highly profitable businesses tend to become less profitable over long periods of time as competitors move into their business.
Yet, we know empirically and intuitively that some small number of businesses do manage to in essence defy the laws of economic gravity and post high returns on capital, high profitability over even decades at a stretch. You might think about a Procter & Gamble, a Disney, a Microsoft. You know, pick almost any industry and you can find a business with an economic moat that is basically managed to stay profitable even in the face of concerted competition.
And these kinds of businesses have done this because they've erected structural barriers, barriers that are inherent to the business and that are sustainable. So, the four kinds of economic moats that we look for when we analyze businesses are intangible assets, customer switching costs, the network effect, and cost advantages.
There's a chapter 8 in Ben Graham's Intelligent Investor about the attitude towards stock market fluctuations and that and the chapter 20 on the margin of safety are the two most important essays ever ever written on investing as far as I'm concerned. Because when I read chapter 8 when I was 19, I I figured it, you know, I mean, what I what I just figured out what I just said, but it was it's obvious.
I didn't figure it out myself though. It was it was explained to me. I'd probably gone another 100 years if I hadn't read it. Still thought it was good when my stocks were going up. The Now, we want we want things to go down, but I have no idea what the stock market's going to do. I never do. Never will.
It's It's not something that that I think about at all. When it goes down, I feel I look harder at what I might buy that day uh because I know there's more likely to be some merchandise there that that I can use my money effectively and think one of the dumbest things you can do in the investment business is to say I'm going to wait for the bottom.
Because logically and even at logically and practically, you'll never know. And so, the only basis for buying is that things are cheap. You can tell when things are cheap. Uh you can't tell when the day has been reached that that it's that it's never going to go down anymore. Mhm.
Comments 0