One of the ironies of the stock market is the emphasis on activity. Brokers, using terms such as 'marketability' and 'liquidity,' sing the praises of companies with high share turnover... but investors should understand that what is good for the croupier is not good for the customer. A hyperactive stock market is the pick pocket of enterprise.
The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage.
We do not view the company itself as the ultimate owner of our business assets but instead view the company as a conduit through which our shareholders own assets.
The ideal business is one that earns very high returns on capital and that keeps using lots of capital at those high returns. That becomes a compounding machine.
When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.
Anything can happen anytime in markets. And no advisor, economist, or TV commentator-and definitely not Charlie nor I-can tell you when chaos will occur. Market forecasters will fill your ear but will never fill your wallet.