The Daily Buffett

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The Cost of Enthusiasm

September 23rd

For the investor, a too-high purchase price for the stock of an excellent company can undo the effects of a subsequent decade of favorable business developments.

Warren Buffett

Even the most excellent company can prove a disastrous investment if bought at an inflated price. The allure of ‘hot stocks’ often blinds us to their actual worth, leading to neglect of the fundamental principle of investing: buy low and sell high. Paying exorbitantly can even negate a decade of solid growth and favorable developments.

Investing isn't about rushing. Patience and discernment are crucial elements on this path. The intoxicating excitement surrounding popular companies can often lead us astray, causing a lapse in judgment in terms of the price we're willing to pay. It's not just about identifying the potential in a great business, but also appreciating the importance of acquiring it at a reasonable price.

The most lucrative investments are often those that are undervalued, not overpriced. So, let's not allow enthusiasm to cloud our judgment. Instead, let's exercise patience, prudence and a keen eye for value which ultimately paves the way to long-term investment success.

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