You're absolutely right. The cartoon only mentions qualitative factors. If the business has been doing well, and those factors are present (and other explanatio

You're absolutely right. The cartoon only mentions qualitative factors. If the business has been doing well, and those factors are present (and other explanations are absent), then it's a reasonable bet that those factors are the reasons for the the business's success. You can then examine each of these factors in isolation and assess how likely they are to continue in future. With these qualitative factors settled, you can look at the numbers, especially the rate of growth of profit, and assume that they will continue (taking into account how sure you are of this), and calculate what the business is worth based on extrapolating that growth. Extrapolation is easy. As a contrast, consider companies during a boom. Explosive growth, even in profitability, but... Another contrast is high tech companies, which can be extraordinarily profitable, but their long-term success has proven hard to predict. Buffett says he won't invest in something unless he understands it - as a programmer, this is great to hear from someone who is so incredibly successful. Now you know the secret. When your grandkids ask you how you became so rich, you can tell them: "it was all because of 10ren". BTW: Thanks for reminding me of all this! Now is the best time to buy stocks. They're on special.