Buying great businesses

When the market is volatile, like it has been lately, I like to look hard at the underlying businesses I own.

Specifically, I like to focus on the economics of each business (competitive advantages, industry dynamics, industry growth, etc.), each business’s management (their long term track record, their business ownership, their pay structure, their focus on shareholder value, etc.) and each business’s valuation (some measure each business’s long term value relative to current price).

Every time I do this, especially when the market is volatile, I’m most happy with the great businesses I own. Why? Because looking at their fundamentals, I feel comfortable they will do well regardless of how much stock market prices fluctuate.

In fact, the best businesses seem to benefit disproportionately when the market seems most shaky. This is when great businesses buy things on the cheap, take advantage of weaker competitors, plan for the next upswing, etc.

And, looking at such great businesses makes me feel very comfortable with how my clients’ and my own money are invested, because I know that when the market eventually recovers, we’ll almost always recognize disproportionate benefits. That’s a nice feeling to have.

Nothing in this blog should be considered investment, financial, tax, or legal advice. The opinions, estimates and projections contained herein are subject to change without notice. Information throughout this blog has been obtained from sources believed to be accurate and reliable, but such accuracy cannot be guaranteed.


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