The Discipline of Waiting (Part II): Why Great Businesses at 6x Cash Flow Are More Common Than Most Investors Think

Part I argued that selectivity and patience matter more than activity or raw intelligence. The obvious rejoinder is practical: if waiting is so valuable, are there enough opportunities to make the wait worthwhile? If world-class businesses always traded at premium prices, patience would mostly be an excuse for inaction.

The historical record says otherwise. Great businesses become available at ordinary prices more often than most investors believe — not on a schedule, and almost always wrapped in fear, controversy, or a temporary setback.

The 6x Standard

A fellow investor connection on LinkedIn put the standard sharply:

At first read this sounds unrealistic. We live in an era where investors routinely pay 20x, 30x, 40x, sometimes 60x cash flow for businesses that are merely good. Yet the same connection supplied a list of world-class businesses that, at various points, traded near the kind of multiple that statement implies.

The Market’s Recurring Gift

Each of these came with a reason not to buy. Apple traded near 6x cash flow while investors questioned whether the iPhone franchise could last. Microsoft sat around 5x when it was written off as a stagnant giant tied to a declining PC market. Meta approached 5x amid metaverse spending, regulatory pressure, and slowing growth. NVIDIA traded near 7x before almost anyone modelled the scale of AI demand. ASML, TSMC, Samsung, Tencent, Exxon Mobil, Walmart, Airbus, Safran, and Christian Dior all had comparable episodes.

The lesson is not that bargains are rare but that they are irregular.

Even the best businesses periodically meet adversity — cyclical downturns, regulatory scrutiny, macro shocks, or simple neglect — and their multiples compress, sometimes sharply. The driver has not changed in a century: markets are collections of people, and as long as people act on fear and greed, the opportunities created by that behaviour will keep appearing. Graham, Buffett, Munger, and Marks built their records on precisely this point — that investing depends less on forecasting the future than on managing one’s own behaviour when it arrives.

Turning Over More Rocks

The same connection made a second point worth holding onto: you have to turn over a lot of rocks. Media attention concentrates on a small set of popular names, which is exactly where competition is fiercest, valuations are most stretched, and expected returns are lowest. The opportunities tend to sit elsewhere — different countries, sectors, market capitalisations, and points in the cycle.

This is not an argument for buying low-quality or obscure businesses for their own sake. It is an argument for breadth of search.

A world-class business at 6x cash flow in an overlooked market can be a far better proposition than a fashionable one at 35x in a crowded one. Removing artificial geographic and sector constraints widens the opportunity set considerably.

A Note from History

Every cycle produces a story explaining why valuation no longer matters. In the late-1990s technology bubble, earnings were said to be obsolete; in housing bubbles, prices supposedly could not fall; in most manias, elaborate justifications appear for paying extreme prices. Fundamentals have reasserted themselves each time. The timing is unpredictable; the eventual direction much less so.

Concentration When It Counts

There is a portfolio implication in the 6x framing. If exceptional businesses occasionally become available at exceptional prices, and those windows are brief, then permanent full investment can leave little room to act when they open. Patience does more than avoid mistakes; it preserves the liquidity and flexibility to deploy capital when the rare opportunity actually arrives. The point is preparation, not recklessness.

The 6x multiple is less a hard rule than a reminder — that the price you are offered for a great business is set by other people’s emotions, and that those emotions, often enough, hand patient investors a bargain.