Google Has Changed From Buy To Hold (NASDAQ:GOOG)

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 yielding similar returns for investors over 40 years, while a business earning 18% can provide substantial returns even at a higher purchase price [1] Group 1: Business Performance and Returns - A business that earns 6% on capital over 40 years will likely result in an investor achieving a similar 6% return [1] - Conversely, a business that earns 18% on capital over 20 to 30 years can yield favorable results for investors, even if purchased at a seemingly high price [1] Group 2: Tax Implications on Investment Returns - The impact of taxes on investment returns is significant; a 35% tax on a 15% annual return at the end results in a 13.3% return after taxes, while paying taxes annually reduces the effective return to 9.75% [1] - The difference of 3.5% in returns due to tax treatment can have a substantial effect over long holding periods, emphasizing the importance of tax strategies in investment decisions [1]