Amazon: The AWS Business Faces Challenges But The Stock Looks Appealing

Core Insights - The long-term returns of a stock are closely tied to the underlying business's performance, with a business earning 6% on capital over 40 years yielding similar returns for investors, regardless of initial purchase price [1] - A business that earns 18% on capital over 20 to 30 years can still provide satisfactory returns even if purchased at a high price [1] - The impact of taxes on investment returns is significant, with a 35% tax at the end of a 30-year investment at 15% per annum resulting in a 13.3% annual return, compared to a 9.75% return if taxes are paid annually [1] Investment Implications - Holding investments in high-performing companies for extended periods can lead to substantial advantages due to the compounding effect of returns [1] - Understanding the tax implications on investment returns is crucial for long-term investors, as it can dramatically alter the effective yield [1]