“In the business world, the rearview mirror is always clearer than the windshield”


“In the business world, the rearview mirror is always clearer than the windshield” Warren Buffett
You can take this quote in a few ways, first being to look backwards for a indication of behavior in the future. The other being that it's easier to be right if you always speak after the event has happened - hindsight. I think the context Mr Buffett was speaking about was about predicting the nature of a business's behaviour by looking at the past. Finding a pattern of growth or failure is what us value investors seek to do when we are evaluating a business. We do this by looking at the financials because the financials paint a picture of the firm. Think of it as an X ray. We look at the past to judge the future, then we add a margin of safety, a spread if you will to allow ourselves a little wiggle room in case we are wrong in our assumptions. The process of investing isn’t much harder than that. But investing like chess is easy to understand but it takes a lifetime to master.

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