View Your Investment as Ownership of a Business
Warren Buffett writes in his 2008 letter to Berkshire Hathaway owners:
We like buying underpriced securities, but we like buying fairly-priced operating businesses even more.
In his 2007 letter to investors Buffett writes:
Charlie and I look for companies that have a) a business we understand; b) favorable long-term economics; c) able and trustworthy management; and d) a sensible price tag. We like to buy the whole business or, if management is our partner, at least 80%. When control-type purchases of quality aren’t available, though, we are also happy to simply buy small portions of great businesses by way of stockmarket purchases. It’s better to have a part interest in the Hope Diamond than to own all of a rhinestone.
A real estate investor must realize that they are buying a business when they buy rental property. Businesses must market and sell a product to customers that are ready, willing, and able to buy in order to make a profit. (credit bigger pockets, Maclennan Investments)