Friday, 13 November 2015

Great, good and gruesome businesses of Warren Buffett (Capital Allocation and Savings Accounts)

Buffett compares his three different types of great, good and gruesome businesses to "savings accounts."  

The great business is like an account that 

  • pays an extraordinarily high interest rate 
  • that will rise as the years pass.

A good one 

  • pays an attractive rate of interest 
  • that will be earned also on deposits that are added.

The gruesome account 

  • both pays an inadequate interest rate and 
  • requires you to keep adding money at those disappointing returns.

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