CSL - $300 and beyond, page-150

The importance of fair prices

Buffett once stated that "it's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."

This means investors shouldn't buy low quality companies because they are cheap and shouldn't necessarily wait for high quality companies to look cheap. Just buying the best companies at fair valuations is sufficient.

And given Buffett's returns over multiple decades, it is hard to argue against this strategy.

The power of compounding

Warren Buffett's strategy isn't about short-term gains but long-term wealth accumulation through compounding. By reinvesting dividends and holding onto high quality stocks for decades, investors can harness the power of compound returns.

For example, an investor who bought CSL shares 20 years ago with a $10,000 investment would have seen it grow to approximately $82,000 excluding dividends. The return would be even greater if those dividends were reinvested back into the market.