Max

“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,” Buffett said. “So if you had your choice, if you could put a hundred million dollars into a business that earns twenty percent on that capital—twenty million—ideally, it would be able to earn twenty percent on a hundred twenty million the following year and on a hundred forty-four million the following year and so on. You could keep redeploying capital at [those] same returns over time. But there are very, very, very few businesses like that...we can move that money around from those businesses to buy more businesses.”
― Alice Schroeder, The Snowball: Warren Buffett and the Business of Life

“Along with his Company A and Company B teaching method, Graham used to talk about Class 1 and Class 2 truths. Class 1 truths were absolutes. Class 2 truths became truths by conviction. If enough people thought a company’s stock was worth X, it became worth X until enough people thought otherwise. Yet that did not affect the stock’s intrinsic value—which was a Class 1 truth.”
― Alice Schroeder, The Snowball: Warren Buffett and the Business of Life

“There are certain things that cannot be adequately explained to a virgin either by words or pictures.”
― Alice Schroeder, The Snowball: Warren Buffett and the Business of Life

“In five years, $1,000 became more than $1,600. In ten years, it became almost $2,600. In twenty-five years, it became more than $10,800. The way that numbers exploded as they grew at a constant rate over time was how a small sum could turn into a fortune. He could picture the numbers compounding as vividly as the way a snowball grew when he rolled it across the lawn. Warren began to think about time in a different way. Compounding married the present to the future. If a dollar today was going to be worth ten some years from now, then in his mind the two were the same.”
― Alice Schroeder, The Snowball: Warren Buffett and the Business of Life