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Monday, November 14, 2011

The Long Term

It's interesting how quarterly projections are 'made' or arrived at, without much knowledge of cash flows.
It's also interesting how moods, sentiments and irrationality affect the price at which one can - theoretically - buy or sell a company, or rather, portions of a company.
It's amusing that professional fund managers are servants to the whims of investors in terms of unforseen or immediate events or limited time horizons; a typical case being that of a private equity fund. They typically have 4-7 years to get in and out of 'investments'.

Do I trust this Company's management based on what I can hear, see or judge?
Do I believe that this Company is interested in making its shareholders and employees richer over a period of time?
Do I largely understand what this Company does and how it is positioned to navigate through/ around obstacles?
Do I believe that this Company is going to do substantially better than most other companies over the long haul?
Do I believe that the price is to my liking?

Note: WB bought into KO in 1988. WB has bought into IBM over the last few months (2011) - USD 10.7 Bn worth of shares for a 5.5 % stake, 64 million shares.

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