52: Buffett's Formula (1999 AGM Clip); Calendar Improvement
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My small suggestion for a slight improvement in human happiness…
Buffett reveals some specific questions he asks about investments
In the clip below Buffett is responding to a question about his investment process and how he selects a discount rate. Some big takeaways:
The use of the US Treasury rate allows for comparability across time and companies.
A dollar is a dollar no matter how/where it’s earned. Once you have it, it’s yours.
Some questions he asks:
What will unit growth look like over ten or 20 years?
How much pricing power will the business have over time?
What are the risks to market share?
What will management do with the cash?
Business quality mitigates management risks (to a degree)
There’s no specific formula for determining a moat; it’s qualitative
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Stay rational! —Adam
