In other words, the percentage change in book value in any given year is likely to be reasonably close to that year's change in intrinsic value.
Interpretation
The change in a company's book value is generally reflective of its intrinsic value changes over time.
Warren Buffett highlights the importance of intrinsic value in evaluating a company's performance. He suggests that when assessing a company's financial health, the percentage change in its book value over a year typically correlates closely to the percentage change in its underlying intrinsic value, thereby emphasizing the significance of both measures in understanding business valuation.
In practice
During a finance lecture on value investing.
I have no views as to where it will be, but the one thing I can tell you is it won't do anything between now and then except look at you. Whereas, you know, Coca-Cola (KO) will be making money, and I think Wells Fargo (WFC) will be making a lot of money and there will be a lot - and it's a lot - it's a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that.
If the world couldn't see your results, would you rather be thought of as the world's greatest investor but in reality have the world's worst record? Or be thought of as the world's worst investor when you were actually the best?
Cash never makes us happy, but it's better to have the money burning a hole in Berkshire's pocket than resting comfortably in someone else's.
I think you should read everything you can. In my case, by the age of 10, I'd read every book in the Omaha public library about investing, some twice. _x000D_ You need to fill your mind with various competing thoughts and decide which make sense.
The most common cause of low prices is pessimism - some times pervasive, some times specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It's optimism that is the enemy of the rational buyer.
Oneβs objective should be to get it right, get it quick, get it out and get it over. Your problem wonβt improve with age.
There is a burden of care in getting riches; fear in keeping them; temptation in using them; guilt in abusing them; sorrow in losing them; and a burden of account at last to be given concerning them.
Most women file for bankruptcy in the aftermath of a serious medical problem, a job loss, or a family break up. It is hard to protect against those.
Indeed, bull markets are fueled by successive waves of prior skeptics finally capitulating as their fears fade. Eventually, fear turns to euphoria, and that's the stuff of bubbles.
You win the modern financial-regulation game by filing the most motions, attending the most hearings, giving the most money to the most politicians and, above all, by keeping at it, day after day, year after fiscal year, until stealing is legal again.
Regardless of what happens in the markets, stick to your investment program. Changing your strategy at the wrong time can be the single most devastating mistake you can make as an investor.
If you hope to have more money tomorrow than you have today, you've got to put a chunk of your assets into stocks. Sooner or later, a portfolio of stocks or stock mutual funds will turn out to be a lot more valuable than a portfolio of bonds or CDs or money-market funds.
Subscribe for the occasional hand-picked quote. No noise.