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Dear Tate,

I don't know about tracking goodwill in an industry.

I do think though that the amount of goodwill on the books is nothing more than a measure of (previously) invested capital. Goodwill doesn't represent capital you can borrow against, for example.

Buffett describes book value and intrinsic value as analogous to the cost and value of a college education. Let's ignore the non-economic benefits of a college education, just consider the salary benefits gained from going to college. If you could value your future career salary gains due to the college education, they may or may not exceed the cost of college. The "cost of college" represents the book value; the resultant salary gains represent the intrinsic value. It may turn out that the intrinsic value is properly above book value; it may turn out it is not.

Best,

Lleweilun Smith
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