Enduring Principles of the Consummate Capitalist¹

The Consummate Capitalist deploys capital to obtain long-term ownership of excellent businesses, whether in their entirety or pro rata (shares).

The Consummate Capitalist relentlessly pursues the highest after-tax, real gain in purchasing power for each dollar of allocated capital.  

The Consummate Capitalist never allocates capital to projects that cannot withstand multi-year paper losses. 

The Consummate Capitalist considers an enterprise's earnings power as valuable only within a context of the firm's commensurate up-building of per share net worth; if earnings are not retained in per share net worth, or paid out through cash dividends. . . the highest reported earnings have no value. (Security Analysis)

The Consummate Capitalist takes one of two roles: creditor or owner; and whichever position is taken, it is never mistaken for the other. 

The Consummate Capitalist wisely employs debt capital for select investments; however, he or she generally shuns personal-use debt.  

The Consummate Capitalist generally ignores the high priests of traditional finance, those who ignore the inter-relationship of long-term business performance, market psychology, and daily auction-house quotes.  Of the weaker premises that create exploitable opportunities, two are most critical: traditional finance's assertion that daily or weekly market volatility is synonymous with risk and the now-awkward assertion (review market panics of September 2008) that capital market actors always behave rationally.  


¹The primary sources for the principles of the consummate capitalist are:  Graham and Dodd’s 1934 classic, Security Analysis, John Burr Williams' The Theory of Investment Value, Eric Beinhocker's Origin of Wealth, Adam Smith's Wealth of Nations, and the theories, teachings, writings, lectures, interviews, and the 50+ year practices of the world's master capital allocator, Warren E. Buffett.