Christopher tells in the pages 31 to 41 the history of Robert Brookings Smith. He was a stock broker who in 1932 bought GE stock as a net net, for half the cash and working capital. The stock would cagr 40% over the next 5 years. But he didn't sell. As the Jack Welsh years were coming to an end, over 1998 he donat…
Christopher tells in the pages 31 to 41 the history of Robert Brookings Smith. He was a stock broker who in 1932 bought GE stock as a net net, for half the cash and working capital. The stock would cagr 40% over the next 5 years. But he didn't sell. As the Jack Welsh years were coming to an end, over 1998 he donated the GE stock to family foundations and other charitables, that promptly sold the stock. I can't think a greater thesis creep than GE stock over the 20th century. He hold throught all of that and then sold at a secular peak. Is he good or he just got lucky?
I think it's worthwhile to extend the timeframes. The day will come where Microsoft is a sell and you'll know who is a Brookings Smith and who just got lucky. Similar to GE, Microsoft is a tough company to run. Microsoft had a greater market cap than most countries in the past and nonetheless it traded at 10x earnings after 35 years in public markets.
In reality, most people didn't hold though it. They sold because the thesis had changed. Other people bought because some new thesis. I am selling a bit here because the thesis seems complete.
On the other hand, picking companies like MSFT, makes you suscetible to have the tailwinds of thesis creep. There's significant auto-correlation. Success begets success. This will never present to people buying stock for 60 pennies in the dollar. So I think investors deserve some credit for choosing a company that is vulnerable to thesis creep.
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Christopher tells in the pages 31 to 41 the history of Robert Brookings Smith. He was a stock broker who in 1932 bought GE stock as a net net, for half the cash and working capital. The stock would cagr 40% over the next 5 years. But he didn't sell. As the Jack Welsh years were coming to an end, over 1998 he donated the GE stock to family foundations and other charitables, that promptly sold the stock. I can't think a greater thesis creep than GE stock over the 20th century. He hold throught all of that and then sold at a secular peak. Is he good or he just got lucky?
I think it's worthwhile to extend the timeframes. The day will come where Microsoft is a sell and you'll know who is a Brookings Smith and who just got lucky. Similar to GE, Microsoft is a tough company to run. Microsoft had a greater market cap than most countries in the past and nonetheless it traded at 10x earnings after 35 years in public markets.
In reality, most people didn't hold though it. They sold because the thesis had changed. Other people bought because some new thesis. I am selling a bit here because the thesis seems complete.
On the other hand, picking companies like MSFT, makes you suscetible to have the tailwinds of thesis creep. There's significant auto-correlation. Success begets success. This will never present to people buying stock for 60 pennies in the dollar. So I think investors deserve some credit for choosing a company that is vulnerable to thesis creep.