"If a business does well, the stock eventually follows"

Warren Buffett’s assertion that “If a business does well, the stock eventually follows” highlights the fundamental connection between a company’s actual performance and its long-term market value. Rather than focusing on the unpredictable short-term swings of stock prices, Buffett encourages investors to pay close attention to the underlying health, earnings power, and long-term prospects of the businesses they own.

Stock prices can fluctuate for a variety of reasons unrelated to the true value of a company, sentiment, speculation, macroeconomic shifts, or market psychology can all drive prices up or down in the short run. Over time, however, stock prices tend to gravitate towards the intrinsic value of a company, which is ultimately determined by factors such as revenue growth, profitability, efficient management, and competitive advantages. When a company thrives, growing its profits, reinforcing its market position, and allocating capital wisely, these successes are eventually recognized and priced into the company’s shares.

Buffett suggests that investors should worry less about short-term volatility or attempts to “time the market,” and instead focus on identifying strong, durable businesses. The logic is grounded in the idea that the stock market acts as a weighing machine over the long haul, rewarding real underlying success rather than quick trends or hype. Patient investors who buy into sound businesses can benefit from compounding growth and eventually see their investments rewarded as the market catches up with business reality.

The quote is also a reminder of the dangers of speculation. Chasing fast-moving stocks without understanding the business behind them can lead to disappointment when prices detach from fundamental value. Conversely, companies that quietly, consistently perform well may not attract short-term enthusiasm, but over time they can generate substantial shareholder returns as their results become too significant for the market to ignore. Ultimately, placing trust in solid businesses is a long-term strategy that has stood the test of time.