History shows us that successful wealth
management requires us to think in terms of years, and
not in days, weeks, or months. By reviewing investments
over 10-, 20-, and 30-year periods, we’ve found that
no investment has performed better than common stocks—not
even bonds, real estate, or precious metals.
It’s true that common stocks may experience
unpleasant bumps for two days or even up to two consecutive
years. However, profitable investing requires patience
and an investment management
technique for selecting and holding a small group of
high-quality companies for the long term.
Financial planners and other professionals
who try to make a profit by timing or predicting stock
market movements are rarely accurate or effective. In
addition, the tax consequences of moving in and out
of stocks can be significant. Conversely, we follow
the time-tested advice of investment guru Warren Buffett:
“If you are not willing to own a stock for 10 years,
don’t even think about owning it for 10 minutes.”
We believe you will find investing in
the common stock of high-quality businesses is a very
worthwhile experience. For example, we invest in businesses
that have low to moderate debt, above-average return
on capital, and generate excess cash flow. These high-quality
companies are much more prepared to weather any economic
storm or general decline in the stock market.
During tough times, the high-quality
companies we select are also better able to take advantage
of growth opportunities such as purchasing competitors
at distressed prices. Another opportunity during general
stock market decline is the chance for the company to
repurchase their own shares at a discount, which reduces
the number of shares outstanding and increases the profit-per-share
for investors—investors like you.
