Beyond just looking for cheap deals, Munger looks for high-quality businesses. In sum, these are profitable businesses that have a sustainable competitive advantage and good growth prospects. (Shortform note: We’ll discuss competitive advantage in the next chapter.)
Ben Graham never accounted for management quality in his value investing principles, partially because he was writing to a mass audience who wouldn’t have the opportunity to talk to and assess management, and partially because he had an intrinsic distrust of management.
Of course, mastering how to invest wisely in the stock market is not just about finding great businesses, but also great businesses at great prices. Even a fantastic business can be a terrible investment if the price is too high.
A. In capitalist economies, most resources are owned by the government
Under a capitalistic system, decisions such as what goods and services to produce, what to charge, and how much to import or export are made by...
A simple supply curve shows that an increase in the price of a good will cause the quantity supplied to...
D. A drawback of capitalism is that people have little freedom to pursue their own goals.
In order to earn money and produce goods that improve lives, self-directed gain would provide jobs, and subsequently wages for others. According to the invisible hand concept, the best way for a society to encourage the creation of jobs and the production of the products most wanted by consumers would be to...
C. The government pays entrepreneurs in the U.S. to produce goods, services, and wealth for others