I cannot emphasize this critical fact enough: although valuation is more important over shorter time periods, quality along with growth is much more important over long time periods (seven to ten years and longer). The longer you hold a stock, the more the quality of that company matters. Your long-term returns will almost always approximate the company’s internal compounding results over time. It is far more important to invest in the right business than it is to worry about whether to pay 10× or 20× or even 30× for current-year earnings.
