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.
One’s objective should be to get it right, get it quick, get it out and get it over. Your problem won’t improve with age.
There are no shortcuts when it comes to getting out of debt.
While enthusiasm may be necessary for great accomplishments elsewhere, on Wall Street it almost invariably leads to disaster
Don’t ever average losers. Decrease your trading volume when you are trading poorly; increase your volume when you are trading well. Never trade in situations where you don’t have control. For example, I don’t risk significant amounts of money in front of key reports, since that is gambling, not trading.
Debt collectors like to play on your emotions because they think you'll give in and do something you can't really afford to do. Most of them don't care about you or your situation as long as they get some money.
When growth is slower-than-expected, stocks go down. When inflation is higher-than-expected, bonds go down. When inflation is lower-than-expected, bonds go up.
While the move to central clearing has made the system safer, we need to make sure that the central counterparties have the resources and risk-management practices to withstand plausible but severe shocks.
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