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How to Determine the Economic Attractiveness of a Company
Buffett believes that if he has selected a company with favorable long term economic prospects run by able and shareholder oriented managers, the proof will be reflected in the increased market value. Buffett wants each dollar of retained earnings to eventually be translated into at least a dollar of increased market value in the business. The market determines the price for the company, but it is the investors job to determine what the actual or true or intrinsic value of the company is.