In the throes of speculative mania, when even the most unprofitable stocks are propelled skyward, it’s all too tempting to lose sight of a fundamental truth: enduring triumph in the realm of investment hinges not on the capricious dance of stock prices but on the bedrock of a company’s profitability. Amidst the frenzy,Warren Buffett points out that the enduring value of an investment is inexorably bound to the prosperity of the underlying business, not the ephemeral whims of the market.
“The only money investors are going to make, in the long run, are what the businesses make,” Buffett said at the 1999 Berkshire Hathaway annual meeting. “I mean, there is nothing added. The government doesn’t throw in anything. You know, nobody’s adding to the pot. People are taking out from the pot, in terms of frictional cost, investment management fees, brokerage commissions and all of that.”
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© 2023 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.