The idea of the “perfect business” — I was sceptical but listened to the elaboration. A perfect business requires no incremental capital, yields functionally infinite returns and has indefinite duration. One downside of a no-capital business is the absence of internal reinvestment opportunities. So the operator of such a business must have skills beyond managerial savvy — specifically, capital allocation acumen and management recruiting astuteness.

Such a perfect business is rare, and a competent executive possessing all the skills needed to lead it is rarer still. That’s why stock analysts are also sceptical, apply valuation discounts and assume that any outperformance will soon reverse. The need to reinvest profits in new and different businesses creates complexity. The best way to address that is to maintain the businesses as autonomous and decentralised units. But this structure produces another downside — opacity — which again dampens investor assessments.