“To ascertain the probability of achieving a return on your initial stake, Buffett encourages you to keep four primary factors clearly in mind:
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The certainty with which the long-term economic characteristics of the business can be evaluated
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The certainty with which management can be evaluated, both as to its ability to realize the full potential of the business and to wisely employ its cash flows
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The certainty with which management can be counted on to channel the rewards from the business to the shareholders rather than to itself
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The purchase price of the business
Investing Bites 