# A sensible purchase price

By [Brandon Donnelly](https://brandondonnelly.com) · 2018-02-27

annual-letter, berkshire-hathaway, investing, investment, real-estate, shareholder-letter, uncategorized, warren-buffet

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> _“Investing is an activity in which consumption today is foregone in an attempt to allow greater consumption at a later date. “Risk” is the possibility that this objective won’t be attained.” -Warren Buffet_

Warren Buffet published [his annual letter](http://www.berkshirehathaway.com/letters/2017ltr.pdf) to Berkshire Hathaway shareholders this past Saturday. I always enjoy reading his letters and I have been [doing it for years](http://brandondonnelly.com/post/140306172818/warrens-blog). If only he wrote a daily blog.

One of the things he talks about in this year’s letter is why Berkshire wasn’t very acquisitive in 2017:

> _In our search for new stand-alone businesses, the key qualities we seek are durable competitive strengths; able and high-grade management; good returns on the net tangible assets required to operate the business; opportunities for internal growth at attractive returns; and, finally, a sensible purchase price._
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> _That last requirement proved a barrier to virtually all deals we reviewed in 2017, as prices for decent, but far from spectacular, businesses hit an all-time high. Indeed, price seemed almost irrelevant to an army of optimistic purchasers._

Some of you in the real estate game might be feeling similarly. But he ends the section with these words of advice: 

> _In the meantime, we will stick with our simple guideline: The less the prudence with which others conduct their affairs, the greater the prudence with which we must conduct our own._

Buffet has a way of simplifying things. He also, clearly, has a way of remaining disciplined.

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*Originally published on [Brandon Donnelly](https://brandondonnelly.com/a-sensible-purchase-price)*