Tuesday, December 27, 2005

The most important thing about a business

We never buy something with a price target in mind. We never buy something at 30 saying if it goes to 40 we'll sell it or 50 or 60 or 100. We just don't do it that way. Anymore than when we buy a private business like See's Candy for $25 million. We don't ever say if we ever get an offer of $50 million for this business we will sell it. That is not the way to look at a business.

The way to look at a business is this going to keep producing more and more money over time? And if the answer to that is yes, you don't need to ask any more questions.


Excerpt from "Buffett Talk to MBA Students at Florida University 1998."


Actions:
  • Ask the question: "is this going to keep producing more and more money over time?" before any other questions when considering a business
  • Prepare to keep a business forever if you are preparing to buy it

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