“You should find businesses where putting the capital to work in the business generates a high return on capital.”
— Bill Ackman
Simplified Meaning:
When choosing a business to invest in, it's important to find one that makes good use of the money it has. Imagine you own a lemonade stand. If you spend $10 on lemons, sugar, and cups, but then earn $30 from selling lemonade, you're making good profits. This means you're using your money wisely because you're seeing a big return on your investment. In the stock market, looking for companies that turn every dollar you invest into much more is smart. For example, Apple started by investing in good products and technology, and it turned that money into huge profits because people loved their products and continued buying them. If someone wants to make smart investments, they should look for companies that can make a lot more money than they spend. By doing this, their original investment grows much faster and becomes more valuable over time.
