Stock as a bond with an unknown coupon rate

By | Investing

(Extracted from University of Berkshire Hathaway by Daniel Pecaut and Corey Wrenn)

Buffett explained that buying a business is much like buying a bond with no maturity and with a blank coupon. You must write in the coupon, and the accuracy of that coupon is the essence of intelligent investing. If you cannot guess the coupon with any accuracy, then do not invest in the business.

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