Most accounting charges relate to what’s going on, even if they don’t precisely measure it. As an example, depreciation charges can’t with precision calibrate the decline in value that physical assets suffer, but these charges do at least describe something that is truly occurring: Physical assets invariably deteriorate. Correspondingly, obsolescence charges for inventories, bad debt charges for receivables and accruals for warranties are among the charges that reflect true costs. The annual charges for these expenses can’t be exactly measured, but the necessity for estimating them is obvious. In contrast, economic goodwill does not, in many cases, diminish. Indeed, in a great many instances — perhaps most — it actually grows in value over time.

Source:   Berkshire Hathaway Shareholder Letters

Leaving aside tax factors, the formula we use for evaluating stocks and businesses is identical. Indeed, the formula for valuing all assets that are purchased for financial gain has been unchanged since it was first laid out by a very smart man in about 600 B.C. (though he wasn’t smart enough to know it was 600 B.C.)...The oracle was Aesop and his enduring, though somewhat incomplete, investment insight was “a bird in the hand is worth two in the bush.” To flesh out this principle, you must answer only three questions. How certain are you that there are indeed birds in the bush? When will they emerge and how many will there be? What is the risk-free interest rate (which we consider to be the yield on long-term U.S. bonds)? If you can answer these three questions, you will know the maximum value of the bush, and the maximum number of the birds you now possess that should be offered for it. And, of course, don’t literally think birds. Think dollars.

Source:   Berkshire Hathaway Shareholder Letters

Aesop’s investment axiom, thus expanded and converted into dollars, is immutable. It applies to outlays for farms, oil royalties, bonds, stocks, lottery tickets, and manufacturing plants. And neither the advent of the steam engine, the harnessing of electricity nor the creation of the automobile changed the formula one iota — nor will the Internet. Just insert the correct numbers, and you can rank the attractiveness of all possible uses of capital throughout the universe.

Source:   Berkshire Hathaway Shareholder Letters

Common yardsticks such as dividend yield, the ratio of price to earnings or to book value, and even growth rates have nothing to do with valuation except to the extent they provide clues to the amount and timing of cash flows into and from the business. Indeed, growth can destroy value if it requires cash inputs in the early years of a project or enterprise that exceed the discounted value of the cash that those assets will generate in later years. Market commentators and investment managers who glibly refer to “growth” and “value” styles as contrasting approaches to investment are displaying their ignorance, not their sophistication. Growth is simply a component usually a plus, sometimes a minus in the value equation. Alas, though Aesop’s proposition and the third variable that is, interest rates are simple, plugging in numbers for the other two variables is a difficult task. Using precise numbers is, in fact, foolish; working with a range of possibilities is the better approach.

Source:   Berkshire Hathaway Shareholder Letters

Usually, the range must be so wide that no useful conclusion can be reached. Occasionally, though, even very conservative estimates about the future emergence of birds reveal that the price quoted is startlingly low in relation to value. (Let’s call this phenomenon the IBT: Inefficient Bush Theory.) To be sure, an investor needs some general understanding of business economics as well as the ability to think independently to reach a well-founded positive conclusion. But the investor does not need brilliance nor blinding insights.

Source:   Berkshire Hathaway Shareholder Letters

At Berkshire, we make no attempt to pick the few winners that will emerge from an ocean of unproven enterprises. We’re not smart enough to do that, and we know it. Instead, we try to apply Aesop’s 2,600-year-old equation to opportunities in which we have reasonable confidence as to how many birds are in the bush and when they will emerge (a formulation that my grandsons would probably update to “A girl in a convertible is worth five in the phonebook.”). Obviously, we can never precisely predict the timing of cash flows in and out of a business or their exact amount. We try, therefore, to keep our estimates conservative and to focus on industries where business surprises are unlikely to wreak havoc on owners. Even so, we make many mistakes: I’m the fellow, remember, who thought he understood the future economics of trading stamps, textiles, shoes and second-tier department stores.

Source:   Berkshire Hathaway Shareholder Letters

References to EBITDA make us shudder; does management think the tooth fairy pays for capital expenditures?

Source:   Berkshire Hathaway Shareholder Letters

...beware of companies displaying weak accounting. If a company still does not expense options, or if its pension assumptions are fanciful, watch out. When managements take the low road in aspects that are visible, it is likely they are following a similar path behind the scenes. There is seldom just one cockroach in the kitchen. Trumpeting EBITDA (earnings before interest, taxes, depreciation and amortization) is a particularly pernicious practice. Doing so implies that depreciation is not truly an expense, given that it is a “non-cash” charge. That’s nonsense. In truth, depreciation is a particularly unattractive expense because the cash outlay it represents is paid up front, before the asset acquired has delivered any benefits to the business. Imagine, if you will, that at the beginning of this year a company paid all of its employees for the next ten years of their service (in the way they would lay out cash for a fixed asset to be useful for ten years). In the following nine years, compensation would be a “non-cash” expense – a reduction of a prepaid compensation asset established this year. Would anyone care to argue that the recording of the expense in years two through ten would be simply a bookkeeping formality?

Source:   Berkshire Hathaway Shareholder Letters

...be suspicious of companies that trumpet earnings projections and growth expectations. Businesses seldom operate in a tranquil, no-surprise environment, and earnings simply don’t advance smoothly (except, of course, in the offering books of investment bankers).

Source:   Berkshire Hathaway Shareholder Letters

There aren’t many See’s [Candies] in Corporate America. Typically, companies that increase their earnings from $5 million to $82 million require, say, $400 million or so of capital investment to finance their growth. That’s because growing businesses have both working capital needs that increase in proportion to sales growth and significant requirements for fixed asset investments. A company that needs large increases in capital to engender its growth may well prove to be a satisfactory investment. There is, to follow through on our example, nothing shabby about earning $82 million pre-tax on $400 million of net tangible assets. But that equation for the owner is vastly different from the See’s situation. It’s far better to have an ever-increasing stream of earnings with virtually no major capital requirements. Ask Microsoft or Google.

Source:   Berkshire Hathaway Shareholder Letters

This “what-will-they-do-with-the-money” factor must always be evaluated along with the “what-do-we-have-now” calculation in order for us, or anybody, to arrive at a sensible estimate of a company’s intrinsic value. That’s because an outside investor stands by helplessly as management reinvests his share of the company’s earnings. If a CEO can be expected to do this job well, the reinvestment prospects add to the company’s current value; if the CEO’s talents or motives are suspect, today’s value must be discounted. The difference in outcome can be huge. A dollar of then-value in the hands of Sears Roebuck’s or Montgomery Ward’s CEOs in the late 1960s had a far different destiny than did a dollar entrusted to Sam Walton.

Source:   Berkshire Hathaway Shareholder Letters

Leverage, of course, can be lethal to businesses as well. Companies with large debts often assume that these obligations can be refinanced as they mature. That assumption is usually valid. Occasionally, though, either because of company-specific problems or a worldwide shortage of credit, maturities must actually be met by payment. For that, only cash will do the job.

Source:   Berkshire Hathaway Shareholder Letters

Every dime of depreciation expense we report, however, is a real cost. And that’s true at almost all other companies as well. When Wall Streeters tout EBITDA as a valuation guide, button your wallet.

Source:   Berkshire Hathaway Shareholder Letters

Forming macro opinions or listening to the macro or market predictions of others is a waste of time. Indeed, it is dangerous because it may blur your vision of the facts that are truly important. (When I hear TV commentators glibly opine on what the market will do next, I am reminded of Mickey Mantle’s scathing comment: “You don’t know how easy this game is until you get into that broadcasting booth.”)

Source:   Berkshire Hathaway Shareholder Letters

When Charlie and I buy stocks – which we think of as small portions of businesses – our analysis is very similar to that which we use in buying entire businesses. We first have to decide whether we can sensibly estimate an earnings range for five years out, or more. If the answer is yes, we will buy the stock (or business) if it sells at a reasonable price in relation to the bottom boundary of our estimate. If, however, we lack the ability to estimate future earnings – which is usually the case – we simply move on to other prospects. In the 54 years we have worked together, we have never foregone an attractive purchase because of the macro or political environment, or the views of other people. In fact, these subjects never come up when we make decisions.

Source:   Berkshire Hathaway Shareholder Letters

Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions. The purchasers view the current good earnings to “earning power” and assume that prosperity is synonymous with safety.

Source:   The Intelligent Investor

The danger in a growth-stock program lies precisely here. Fop such favored issues the market has a tendency to set prices which will not be adequately protected by a conservative projection of future earnings. (It is a basic rule of prudent investment that all estimates, when they differ from actual performance, must err at least slightly on the side of understatement.) The margin of safety is always dependent on the price paid.

Source:   The Intelligent Investor

The margin-of-safety idea becomes much more evident when we apply it to the field of undervalued or bargain securities. We have here, by definition, a favorable difference between price on the one hand and indicated or appraised value on the other. That difference is the safety margin. It is available for absorbing the effect of miscalculations or worse-than-average luck. The buyer of bargain issues places particular emphasis on the ability of the investment to withstand adverse developments. For in most cases he has no enthusiasm about the company’s prospects.

Source:   The Intelligent Investor

When I speak of [the efficient market] theory, I also use the word "efficient" but I mean it in the sense of speedy, quick to incorporate information, not "right". I agree that because investors work hard to evaluate every new piece of information, asset prices immediately reflect the consensus view of the information's significance. I do not, however, believe the consensus view is necessarily correct.

Source:   The Most Important Thing

SETH KLARMAN: Psychological influences are a dominating factor governing investor behavior. They matter as much as—and at times more than—underlying value in determining securities prices.

Source:   The Most Important Thing

In the great debate over efficiency versus inefficiency, I have concluded that no market is completely one or the other. It’s just a matter of degree. I wholeheartedly appreciate the opportunities that inefficiency can provide, but I also respect the concept of market efficiency, and I believe strongly that mainstream securities markets can be so efficient that it’s largely a waste of time to work at finding winners there.

Source:   The Most Important Thing

Theory says high return is associated with high risk because the former exists to compensate for the latter. But pragmatic value investors feel just the opposite: They believe high return and low risk can be achieved simultaneously by buying things for less than they’re worth. In the same way, overpaying implies both low return and high risk.

Source:   The Most Important Thing

When things are going well, extrapolation introduces great risk. Whether it’s company profitability, capital availability, price gains, or market liquidity, things that inevitably are bound to regress toward the mean are often counted on to improve forever.

Source:   The Most Important Thing

Fundamental Analysis is more interesting because it is an out-growth of the equilibrium theory. Stocks are supposed to have a true or fundamental value distinct from their current market price. The fundamental value of a stock may be defined either in relation to the earning power of the underlying assets or in relation to the fundamental value of other stocks. In either case, the market price of a stock is supposed to tend toward its fundamental value over a period of time so that the analysis of fundamental values provided a useful guide to investment decisions...[But] the possibility that stock market developments may affect the fortunes [earning power] of the companies is left out of account...Stock market valuations have a direct way of influencing underlying values: through the issue and repurchase of shares and options and through corporate transactions of all kinds...

Source:   The Alchemy of Finance

In any case, a "reflexive" model cannot take the place of fundamental analysis: all it can do is to provide an ingredient that is missing from it. In principle, the two approaches could be reconciled. Fundamental analysis seeks to establish how underlying values are reflected in stock prices, whereas the theory of reflexivity shows how stock prices can influence underlying values. One provides a static picture, the other a dynamic one.

Source:   The Alchemy of Finance

Valuation is supposed to be a passive relationship in which the value reflects the underlying asset; but in this case [of credit] it involves a positive act: a loan is made. The act of lending may affect the collateral value: that is the connection that gives rise to a reflexive process.

Source:   The Alchemy of Finance

Fisher's Research Questions: How effective are the company's research and development efforts in relation to its size?

Source:   Common Stocks and Uncommon Profits

Fisher's Research Questions: POINT 5. Does the company have a worthwhile profit margin? POINT 6. What is the company doing to maintain or improve profit margins?

Source:   Common Stocks and Uncommon Profits

Fisher's Research Questions: POINT 12. Does the company have a short-range or long-range outlook in regard to profits?

Source:   Common Stocks and Uncommon Profits

Fisher's Research Questions: POINT 13. In the foreseeable future will the growth of the company require sufficient equity financing so that the larger number of shares then outstanding will largely cancel the existing stockholders' benefit from this anticipated growth?

Source:   Common Stocks and Uncommon Profits

...if investment is limited to outstanding situations, what really matters is whether the company's cash plus further borrowing ability is sufficient to take care of the capital needed to exploit the prospects of the next several years. If it is, and if the company is willing to borrow to the limit of prudence, the common stock investor need have no concern as to the more distant future. If the investor has properly appraised the situation, any equity financing that might be done some years ahead will be at prices so much higher than present levels that he need not be concerned.

Source:   Common Stocks and Uncommon Profits

The reason why the growth stocks do so much better is that they seem to show gains in value in the hundreds of per cent each decade. In contrast, it is an unusual bargain that it is as much as 50 per cent undervalued. The cumulative effect of this simple arithmetic should be obvious.

Source:   Common Stocks and Uncommon Profits

Most small investors cannot live on the return on their investment no matter how high a yield is obtained, since the total value of their holdings is not great enough. Therefore for the small investor the matter of current dividend return usually comes down to a choice between a few hundred dollars a year starting right now, or the chance of obtaining an income many times this few hundred dollars a year at a later date.

Source:   Common Stocks and Uncommon Profits

An otherwise good management which increases dividends, and thereby sacrifices worthwhile opportunities for reinvesting increased earnings in the business, is like the manager of a farm who rushes his magnificent livestock to market the minute he can sell them rather than raising them to the point where he can get the maximum price above his costs. He has produced a little more cash right now but at a frightful cost.

Source:   Common Stocks and Uncommon Profits

Actually dividend considerations should be given the least, not the most, weight by those desiring to select outstanding stocks. Perhaps the most peculiar aspect of this much-discussed subject of dividends is that those giving them the least consideration usually end up getting the best dividend return. Worthy of repetition here is that over a span of five to ten years, the best dividend results will come not from the high-yield stocks but from those with the relatively low yield.

Source:   Common Stocks and Uncommon Profits

The investor is constantly being fed a diet of reports and so-called analyses largely centered around these price figures for the past five years. He should keep in mind that it is the next five years' earnings, not those of the past five years, that now matter to him. One reason he is fed such a diet of back statistics is that if this type of material is put in a report it is not hard to be sure it is correct. If more important matters are gone into, subsequent events may make the report look quite silly. Therefore, there is a strong temptation to fill up as much space as possible with indisputable facts, whether or not the facts are significant. ...many people in the financial community place emphasis on this type of prior years' statistics for a different set of reasons. They seem to be unable to grasp how great can be the change in just a few years' time in the real value of certain types of modern corporations. Therefore they emphasize these past earnings records in a sincere belief that detailed accounting descriptions of what happened last year will give a true picture of what will happen next year.

Source:   Common Stocks and Uncommon Profits

The only true test of whether a stock is “cheap” or “high” is not its current price in relation to some former price, no matter how accustomed we may have become to that former price, but whether the company's fundamentals are significantly more or less favorable than the current financial-community appraisal of that stock.

Source:   Common Stocks and Uncommon Profits

The price of any particular stock at any particular moment is determined by the current financial-community appraisal of the particular company, of the industry it is in, and to some degree of the general level of stock prices. Determining whether at that moment the price of a stock is attractive, unattractive or somewhere in between depends for the most part on the degree these appraisals vary from reality. However, to the extent that the general level of stock prices affects the total picture, it also depends somewhat on correctly estimating coming changes in certain purely financial factors, of which interest rates are by far the most important.

Source:   Common Stocks and Uncommon Profits

...reading the printed financial records about a company is never enough to justify an investment. One of the major steps in prudent investment must be to find out about a company's affairs from those who have some direct familiarity with them.

Source:   Common Stocks and Uncommon Profits

I have come to believe that the most that can be said on this subject of dividends is that it is an influence that should be downgraded very sharply by those who do not need the income. In general, more attractive opportunities will be found among stocks with a low dividend payout or none at all.

Source:   Common Stocks and Uncommon Profits

[Buffett] defines a franchise as a company providing a product or service that is (1) needed or desired, (2) has no close substitute, and (3) is not regulated. These traits allow the company to hold its prices, and occasionally raise them, without the fear of losing market share or unit volume. This pricing flexibility is one of the defining characteristics of a great business; it allows the company to earn above-average returns on capital.

Source:   The Warren Buffett Way

The most important management act is the allocation of the company’s capital. It is the most important because allocation of capital, over time, determines shareholder value. Deciding what to do with the company’s earnings in the business or return money to shareholders—is, in Buffett’s mind, an exercise in logic and rationality. “Rationality is the quality that Buffett thinks distinguishes the style with which he runs Berkshire—and the quality he often finds lacking in other corporations,” wrote Carol Loomis of Fortune magazine.

Source:   The Warren Buffett Way

...there are times when long-term interest rates are abnormally low. During these periods, we know that Buffett is more cautious and likely adds a couple of percentage points to the risk-free rate to reflect a more normalized interest rate environment.

Source:   The Warren Buffett Way

With stocks held three years, the degree of correlation between stock price and operating earnings ranged from .131 to .360. (A correlation of .360 means that 36 percent of the variance in the price was explained by the variance in earnings.) With stocks held for five years, the correlation ranged from .374 to .599. In the 10-year holding period, the correlation between earnings and stock price increased to a range of .593 to .695. This bears out Buffett’s thesis that, given enough time, the price of a business will align with the company’s economics. He cautions, though, that translation of earnings into share price is both “uneven” and “unpredictable.” Although the relationship between earnings and price strengthens over time, it is not always prescient. “While market values track business values quite well over long periods,” Buffett notes, “in any given year the relationship can gyrate capriciously.” Ben Graham gave us the same lesson: “In the short run the market is a voting machine but in the long run it is a weighing machine.”

Source:   The Warren Buffett Way

“I have always found it easier to evaluate the weights dictated by fundamentals,” said Buffett, “than votes dictated by psychology.”

Source:   The Warren Buffett Way

The stronger and more vigorous your company’s isolating mechanisms are, the more prices stabilize or even rise. As the isolating power of your capabilities weakens, the amount of time that you have to recoup profits from innovation declines. Prices fall more rapidly. Product advantage becomes more temporary. Economic time speeds up.

Source:   Renewable Competitive Advantage

Investors operate by the same laws as do managers. For investors, the laws of convergence, alignment, and renewal show up through a concern for the speed and duration of cash flows. In this way, the question for investors is the same as for managers: “Where is the business in economic time?” And, “Where is the business heading in economic time?” Several techniques can align managers with investors in crafting strategy.

Source:   Renewable Competitive Advantage

The first law of competitive evolution is convergence. When you successfully innovate, profits follow…Then, just as surely, competitors offer newer products or improved products at lower costs…Profits become low, zero, or even negative.

Source:   Renewable Competitive Advantage

You can slow down convergence through isolating mechanisms but you cannot stop it. Convergence formalizes the idea of economic time that nothing lasts forever.

Source:   Renewable Competitive Advantage

[In Fast-Cycle markets] Value is idea-driven. Profit cycles are short. There is little that slows down the copying process or retards the fast commercialization of attractive alternatives. Complimentary assets are weak. Isolating mechanisms like scale orchestration, as well as geography, patents, and close customer relationships are rare. Fast-cycle markets and the products sold in them are based on freestanding, portable ideas. Value is high upon introduction but erodes quickly as ideas become commonplace.

Source:   Renewable Competitive Advantage

Worldwide, wealthy, educated customers are predisposed to try out new products with little delay. Global capitalism generates ever-rising amounts of capital for investment. Technology can be employed to build or to copy any number of configurations of products, quickly and efficiently. Global communications have transformed international markets into an electronic village where distance no longer matters. Imagine a marketplace where thousands of idea-driven, well-financed companies have quick access to millions of customers who, as they say, “have so much money that they don’t know what to do with it”. These are the building blocks of fast-cycle markets.

Source:   Renewable Competitive Advantage

Convergence is continually at work on standard-cycle companies. Profits fall when any combination of poorly thought out, poorly executed investments or superior competitor moves forces products [to be neither a cost leader nor a product differentiator]. We think of this as competitive Hell, where your rate of return falls below your cost of capital. One manager remarked that this region is more like Purgatory, where you may have another chance to work out your sins before the Final Judgement.

Source:   Renewable Competitive Advantage

Convergence: [About] thirty percent of typical company’s value is set by where its products are located on the convergence curve. For a multiproduct company, the aggregate location of all of its products on the convergence curve shows up as total current profits. Significant also is the speed at which a company’s markets are becoming more competitive. This shows up as the rate of movement of products along the convergence curve toward zero profits. While the rate of movement along the convergence curve will not affect current profits, rate of movement affects sustainability of profits.

Source:   Renewable Competitive Advantage

Renewal: [About] Seventy percent of a company’s value is determined by efforts in place to refresh ageing products. The company’s price/earnings ratio is a measure of this: the degree to which current earnings are multiplied by the expectations that earnings can be sustained and improved.

Source:   Renewable Competitive Advantage

Where your isolating mechanisms are weak, economic time moves fast, so strategies can be imitated quickly. This is another reason why strategy in fast-cycle markets needs to be quick and adaptive. Where isolating power is strong, and economic time moves slowly, strategies will be more difficult to imitate. In this way the speed at which a strategy can be copied mirrors underlying capabilities and the economic cycle time of a market. Or put simply: think about the half-life of your strategy. It’s part of the calculus of economic time.

Source:   Renewable Competitive Advantage

The length of an organization’s renewal cycle, the amount of time required to recapitalize itself, is influenced by where the organization operates in economic time. This is because economic time provides a guide to the amount of time over which the market alignment is likely to remain viable. To the degree that a company’s environment is changing, or is transforming in economic time, the renewal cycle must keep pace. When an organization’s renewal cycle falls behind the speed of realignment, the rate of capitalization of the company will fall. This is just another way of saying that the company’s capabilities are ageing faster than they need to be renewed.

Source:   Renewable Competitive Advantage

The relative predictability of cash flows of a slow-cycle company should be attractive to creditors. Management can use predictability to bolster arguments for proposing low-risk payout schedules for creditors. A lower level of debt for the company may be possible, in service of relatively high-confidence forecasts of sources of cash flows.

Source:   Renewable Competitive Advantage

A question we hear from managers working across economic time is: “Which economic time zone is better?” Long product cycles, while they appear attractive, are not necessarily better than short product cycles in this regard. This is because the total amount of cash flows and the speed at which they are received represent a tradeoff between the stability associated with longer profit cycles and the speed of payback associated with longer profit cycles. Thus economic time cycles create opportunities – but the speed and means by which cash flows from different economic time cycles create value are highly differentiating.

Source:   Renewable Competitive Advantage

We believe that a fundamental measure of our success will be the shareholder value we create over the long term. This value will be a direct result of our ability to extend and solidify our current market leadership position. The stronger our market leadership, the more powerful our economic model. Market leadership can translate directly to higher revenue, higher profitability, greater capital velocity, and correspondingly stronger returns on invested capital.

Source:   Amazon Shareholder Letters

When forced to choose between optimizing the appearance of our GAAP accounting and maximizing the present value of future cash flows, we'll take the cash flows.

Source:   Amazon Shareholder Letters

In that 1997 letter, we wrote, “When forced to choose between optimizing the appearance of our GAAP accounting and maximizing the present value of future cash flows, we’ll take the cash flows.” Why focus on cash flows? Because a share of stock is a share of a company's future cash flows, and, as a result, cash flows more than any other single variable seem to do the best job of explaining a company's stock price over the long term.

Source:   Amazon Shareholder Letters

Our ultimate financial measure, and the one we most want to drive over the long-term, is free cash flow per share. Why not focus first and foremost, as many do, on earnings, earnings per share or earnings growth? The simple answer is that earnings don’t directly translate into cash flows, and shares are worth only the present value of their future cash flows, not the present value of their future earnings. Future earnings are a component—but not the only important component—of future cash flow per share. Working capital and capital expenditures are also important, as is future share dilution.

Source:   Amazon Shareholder Letters

Cash flow statements often don’t receive as much attention as they deserve. Discerning investors don’t stop with the income statement.

Source:   Amazon Shareholder Letters

Perhaps the single greatest error in the investment business is a failure to distinguish between the knowledge of a company’s fundamentals and the expectations implied by the market price.

Source:   More Than You Know

While recognition that price-earnings ratios are likely nonstationary is critical, knowing why they are nonstationary provides more practical insight. Three big drivers of price-earnings ratio nonstationarity are the role of taxes and inflation; changes in the composition of the economy; and shifts in the equity-risk premium.

Source:   More Than You Know

Because price-earnings ratios are likely nonstationary, investors should use them sparingly and cautiously, if at all. The attraction of a ratio, of course, is that it is often a useful rule of thumb. I argue, however, that investors who insist on using multiples will find them much more useful if they unpack the embedded assumptions.

Source:   More Than You Know