After Reading This Passage from Charlie Munger, 90% of Your Investing Problems Will Be Solved
After reading this passage from Charlie Munger, 90% of your investing problems will be solved! Why? Because this passage goes straight to the underlying logic of investing: Buying a stock is buying a company. Munger put it this way: Over the long term, investment returns are very unlikely to be much higher than the company’s average annual profits. If a company’s return over 40 years is 6%, and you hold this company during those 40 years, even if you bought at a very cheap price early on, your return won’t differ much from that 6%. Conversely, if a company’s return over the past 20 years is 18%, then even if you buy at an expensive price now, the returns you get in the future will still be very substantial. ...