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Business Quote by Charlie Munger

“Over the long term, it's hard for a stock to earn a much better return that the business which underlies it earns. If the business earns six percent on capital over forty years and you hold it for that forty years, you're not going to make much different than a six percent return - even if you…” quote by Charlie Munger
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“Over the long term, it's hard for a stock to earn a much better return that the business which underlies it earns. If the business earns six percent on capital over forty years and you hold it for that forty years, you're not going to make much different than a six percent return - even if you originally buy it at a huge discount. Conversely, if a business earns eighteen percent on capital over twenty or thirty years, even if you pay an expensive looking price, you'll end up with one hell of a result.”

Charlie Munger

About This Quote

Source Speech: Annual Shareholder Meeting, Berkshire Hathaway, 1995

Long‑term stock returns mirror the underlying business’s return on capital; high‑return businesses outperform even at premium prices, while low‑return ones lag despite discounts.

In simple terms: Stock returns follow business performance over time.

Key Takeaway

Invest in businesses with strong, sustainable returns.

Themes

investing business fundamentals long‑term perspective

Mood

cautious analytical

Type

advisory educational

When to use this quote

  • portfolio construction
  • retirement planning
  • wealth building
  • stock selection

Key Concepts

return on capital compound growth valuation discipline

Questions to Reflect On

  • How do you assess a business’s durable return on capital?
  • What margin of safety do you require for high‑price purchases?
A Different Perspective

High returns may be hard to sustain; market cycles can affect outcomes.

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Business Business Earns Customer Different Discounts Eighteen Ends Expensive Forty Hard Hell Huge Ifs Investing Long Long term Pay Percent Percent Capital Percent Return Results Return Return Business Six Stock Earn Term Thirty Thirty years Twenties Years

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