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The simplified version:

Stock gives you a share of current and future profits (via dividends) as well as a share of the liquidation value of the company. If a company continues to acquire assets, this increases its liquidation value; some companies do this rather than paying dividends because it's more tax-efficient for investors.

One of Warren Buffett's investment strategies is to look for companies that are stable but whose stock is trading at below liquidation value.



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