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Why a Great Company Isn't Always a Great Investment

Morgan Housel and Austin Smith
December 18, 2012

Apple is one of the companies discussed in the video below, but this is just the opinion of two people. There is a debate raging as to whether Apple remains a buy today. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and more importantly, your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.


Austin Smith: Morgan, you made a point in an article recently that a great company doesn't always make a great investment. That's a difficult thing for people to understand because we always say, "Buy great companies," but of course you have to buy them at the right price.

So, I'm wondering if you could shed a little bit of light and provide some clarity on that distinction.

Morgan Housel: You just said the point yourself. It's great to buy good companies. You always want to do that, but you have to get them at the right price.

Two examples that I like to use to show why a great company doesn't always make a great investment are Microsoft (NASDAQ: MSFT) in 2000 and Wal-Mart (NYSE: WMT)