Great article Rudi. Hard to disagree with the thesis that not just some, but indeed many if not most companies aren't worth investing in. Take away ever decreasing interest rates and government support and what would the lacklustre returns become.
Great Australian companies, Rudi: Xero - yet another iconic " Australian"!
I have ordered the book. Thanks!
I used to give this book to my clients as a guide, especially those which had a poor culture & micro managing owners, those who embraced the key ideas did well for the most part.
Hi Grant, I know, right? Like Russell Crowe, Crowded House, a2 Milk, and plenty of others. But Xero is listed on the ASX, and on my assessment a quality business with a long runway for growth. Maybe that's the core element to remember;)
Surely JB HIFI has to make the cut of a great company. They have evolved from bricks and mortar and are dominating online. The culture is incredible - employees are incredibly passionate about what they do.
Agree, totally, Rudi - just a bit of fun as you know. I've started reading the book - great recommendation, thanks. Keep up the good work.
Hi Rudy, I am inclined to agree with your assessment re JB Hi-Fi. I remain wary of retailers in general, given the many structural challenges (longer term) and unknowns, but JB Hi-Fi at the very least is Australia's highest quality retailer. As a side note, I am having a bit of an identity crisis. I use Rudi as my name, but my birth certificate reads Rudy;)
Excellent article Rudy! Indicative of the reasons I closely read your wires. I guess that some of us are seduced into buying less-than-great companies by short term considerations, particularly in the technology sector. Keep up the good work. Michael
Thanks Rudi, very timely article. I read the book a few years ago and it is excellent - a really good way to understand how get rid of all the 'noise'. Jim has written several other books as well, but this is the one that sticks in my mind the most.
As a counter read "The Halo Effect" by Phil Rosenzweig who argues that "Good to Great" is flawed research.
but simply buying the Australian or USA Index has produced satisfactory returns over the longer term. do we really need to try to pick the best 4% of stocks ?
Frank, having done my own research into the likes of CSL, REA Group, ResMed, etc in Australia, I can assure you the basic fundamentals of identifying Great companies, as opposed to the majority out there, is nothing less than life-changing. Queue all those investors who have seen their capital being eroded by holding on to Telstra , AMP, etc while continuously believing the army of professional 'value' investors telling them they could not possibly buy the likes of CSL. But I will check out your suggestion. In the end, investing in the share market starts with knowing what you are after, and that's necessarily the same for everyone
Hi Carlos, if owning the index works for you, and that's all you are after, that's fine. Absolutely nothing wrong with it. After all, investing is about what works for YOU. The story above was addressing those investors who own a portfolio of individual stocks, and maybe some other instruments too, with the goal of achieving great returns over a longer-term horizon. For them, it might be important to know not all companies are the same, and a 'cheap' valuation is easily superseded by corporate greatness (quality) in the long run. If anything, it avoids sticking with Telstra, AMP, etc for too long (if they ever went there in the first place).
A good insight, thank you !
Yes a great article