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Investment Gold from Warren Buffett

March 5, 2010

As I’ve said before, I love reading investment outlooks and letters. Warren Buffet’s is without a doubt one of the most famous, and for good reason.

Take this quote from his latest letter for instance:

“Charlie and I avoid businesses whose futures we can’t evaluate, no matter how exciting their products may be. In the past, it required no brilliance for people to foresee the fabulous growth that awaited such industries as autos (in 1910), aircraft (in 1930) and television sets (in 1950). But the future then also included competitive dynamics that would decimate almost all of the companies entering those industries. Even the survivors tended to come away bleeding.

Just because Charlie and I can clearly see dramatic growth ahead for an industry does not mean we can judge what its profit margins and returns on capital will be as a host of competitors battle for supremacy. At Berkshire we will stick with businesses whose profit picture for decades to come seems reasonably predictable. Even then, we will make plenty of mistakes.”

The insight and discipline shown here is incredible, and is certainly one of the reasons why he has been so consistently successful.

Quote originally found here.

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From → business

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