If the business earns 6% on capital over 40 years and you hold it for that 40 years, you’re not going to make much different than a 6% return—even if you originally buy it at a huge discount. Conversely, if a business earns 18% on capital over 20 or 30 years, even if you pay an expensive looking price, you’ll end up with a fine result.
Charlie Munger – Vice Chairman of Berkshire Hathaway (1924-2023), from his speech “A Lesson on Elementary, Worldly Wisdom As It Relates To Investment Management & Business” at the USC Business School (1994), Quotations book 2025