Compounding Quality
The strategic principle that a great business at a fair price compounds the value of the investors capital at the rate of the business return on incremental capital over the holding period, while a fair business at a great price produces a single bounded return from the eventual closing of the discount. Over multi-decade horizons, compounding quality mathematically dominates one-time discount realization -- the structural insight that drove the Buffett-Munger evolution out of Grahams cigar-butt framework.
Lessons that use this term
Related terms
Ambiguity Aversion · Anchored Assumption · Asset Beta · Bank ROE Spread · Banker Pitch Deck · Beta
Open this term in the app → — no account needed; browse the full glossary while you research.