Warren Buffett: Fairly captive

“Money tends to be fairly captive, once it’s in a company. If you have a business that gets subnormal returns over time, there’s a big threshold in terms of either a takeover, or a proxy fight, or something like that to unleash the capital. So, money that’s tied up in an unprofitable business, or a sub-profitable business, is likely to stay tied up for a good period of time. Eventually something will probably correct it. But capitalism does not operate so efficiently as to move capital around promptly when it’s misallocated.”

—Warren Buffett.

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