“It’s far better to buy a wonderful business at a fair price than a fair business at a wonderful price.”
Time + wonderful business = wealth.
Time + fair business = mediocre results.
When one buys a fair business at a wonderful price, they are relying on the stock market to generate their returns; hoping that the business’ valuation will rise. When one buys a wonderful business, they can sit back and let the business grow over time; increasing value on its own.
So what makes a wonderful business? Buffett believes that wonderful businesses are positioned to perform well regardless of future changes to consumer behavior, the economic environment, and the technological landscape. This has led to Buffett stating the following: