A Quote by Seth Klarman

If an asset has cash flow or the likelihood of cash flow in the near term and is not purely dependment on what a future buyer might pay, then it's an investment. If an asset's value is totally dependent on the amount a future buyer might pay, then its purchase is speculation.

Seth Klarman

Quote Topics

Amount Asset Buyer Cash Cash Flow Dependent Flow Future Investment Likelihood Might Near Pay Purchase Purely Speculation Term Then Totally Value

Quote Author

Seth Klarman
American - Author
Born: May 21, 1957

The essence of a good investment manager is one who studies a given business and extrapolates the future cash flows that the business is likely to generate over the next several years. Based on the cash flow and asset assessment, they can then arrive at their expected rate of return if they bought a fraction of that business at a given price.

Mohnish Pabrai

What we define as a bubble is any kind of debt-fueled asset inflation where the cash flow generated by the asset itself - a rental property, office building, condo - does not cover the debt incurred to buy the asset. So you depend on a greater fool, if you will, to come in and buy at a higher price.

James Chanos

Gold is a commodity; over the long run, as we look back, it has not been a good investment. You can't look at the intrinsic value of gold as you can a business. Gold doesn't give you cash flow, and, at the end of the day, cash flow is what is important. Gold doesn't give you dividends.

Michael Lee-Chin

Our attitude toward cash generation and asset management came out of our own thought process. After we acquired a number of businesses we reflected on aspects of business. Our own conclusion was that the key was cash flow.

Henry Earl Singleton

The future is never clear; you pay a very high price in the stock market for a cheery consensus. Uncertainty actually is the friend of the buyer of long-term values.

Warren Buffett

In general, an asset should be sold when it has greater value to a buyer. This happens when a buyer has a complimentary business or capability that would enable them to do more with that business. Many businesses we have exited were not failures, but had simply reached a point in their life cycle where they no longer provided a core capability or served as a platform for growth.

Charles Koch

You can't look at the intrinsic value of gold as you can a business. Gold doesn't give you cash flow, and, at the end of the day, cash flow is what is important. Gold doesn't give you dividends.

Michael Lee-Chin

If you look at academic studies, you can see that stock prices are most closely correlated with cash flow. It's such a straightforward number. Cash flow is what will drive shareholder returns.

Jeff Bezos

An argument is made that there are just too many question marks about the near future; wouldn't it be better to wait until things clear up a bit? You know the prose: "Maintain buying reserves until current uncertainties are resolved," etc. Before reaching for that crutch, face up to two unpleasant facts: The future is never clear and you pay a very high price for a cheery consensus. Uncertainty actually is the friend of the buyer of long-term values.

Warren Buffett

Value investors look at cash flows. If a company can maintain present cash flows for 5 or 6 years, it’s a good investment. Investors then just hope that those cash flows - and thus the company’s value - don’t decrease faster than they anticipate.

Peter Thiel

Today people who hold cash equivalents feel comfortable. They shouldn't. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value.

Warren Buffett

Many small business owners want to pass their family legacy on to their kids and grandkids, but they are turned over to vulture funds because the family may be asset rich but lacks the cash to pay the estate taxes. I have met people who literally sold the farm to pay the taxes.

Stephen Moore

When I ran a small IT services business in the 1990s, it had strong recurring revenues - yet I couldn't accurately forecast cash flow for even the next few quarters. Small changes in the customer base or losing/hiring a few key employees could create massive swings in cash flow.

Mohnish Pabrai

It all comes down to interest rates. As an investor, all you're doing is putting up a lump-sump payment for a future cash flow.

Ray Dalio

Our first use of cash is invested organically, secondly returning values our shareholders - roughly 100 percent free cash flow. And then thirdly, mergers, acquisitions, partnerships that complement our organic strategy. We are going to continue down that path.