When someone considers buying a stock, there are two types of thoughts that could enter his mind: market decisions and investment decisions. A market decision is what you’d expect; someone buys a stock and expects the price to go up, usually within a few months, or a year or two maximum.
An investment decision is much more binding in a self-imposed way—you are saying, “I really like the business economics here, and I believe this company is going to be generating much higher profits five, ten, even fifteen to twenty years from now. Getting past the obvious niceties that nothing is ever certain, you reach the conclusion that a company worthy of such an investment has a high probability of achieving the returns you predict.
One of the companies that is difficult for me to study is Altria, the historic tobaccomaker that went by the name Philip Morris until it … Read the rest of this article!