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Buffett + Munger on EBITDA: Munger: "Its 'bullsh*t earnings'."
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I demystify the stock market. Want a copy of my stock investing checklist? Grab it here (for free):
Is this the greatest business one-liner of all time? Has to be, right?
EBITDA = 10 ITDA = 11 E = (1)
Munger is phenomenal but the key to this clip is listening to Buffett VERY closely
Accounting is done by accountants for regulation purposes. Not by investors for investors. Adjust your numbers people!
Man, Munger is hilarious! 😂
It’s crazy how many private equity deals are valued on EBITDA and not net income.
I never use EBITDA because it includes financial income but exclude financial expense!. I rarely use reported profit because it includes onetime income/expense. I use normalized profit, cash flow from operations and free cash flow to evaluate my investment decision.
Total master class of explanation by both men. Buffet attempting to educate, Munger providing the bottom line up front.
I 100% agree. I used to buy into that metric, but then got burned by companies that never got off that metric and eventually went bankrupt.
![MUNGER: Warren and I were offered $2 million worth of projections once in the course of buying a business. BUFFETT: For nothing. MUNGER: [Even] if we were given it for nothing, we wouldn't open it. BUFFETT: We'd almost pay $2 million not to look at it.](https://image.24vids.com/tw-1886074993294921763/ext_tw_video_thumb/1886074499763748864/pu/img/DOOOuFK036_F41SS.jpg)
![Buffett: “What do you think the end will be?” Munger: “Bad.” In 2005, exactly 20 years ago, Buffett and Munger talked about the consequences of US structural trade deficits. Warren Buffett predicted: “Ownership by the rest of the world, of [the US], would be seen as a form of taxation 20 years from now by the people who reside here.” 👀](https://image.24vids.com/tw-1910692185927807413/amplify_video_thumb/1910691683479539712/img/n5jYVpbW_ubibL2N.jpg)
