Let’s pretend you and I grabbed lunch yesterday. After you and I had exchanged initial pleasantries, you asked me what my favorite current investment was, and I spent the rest of the lunch talking up dominant tech company X. For our purposes, let’s call this theoretical company Megahard.
Hi Paul- I’m not sure if I’ve got anything quite that long term compounding, but I post a link to all picks in the premium section every month and happy to chat over email about any of them!
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.
Honestly, I thought rather than Benjamin Buttoning MSFT from today, I just thought you were recounting (with some very small tweaks, e.g. AI/cloud) MSFT's story from 25-ish to 10-ish years ago (aka the Ballmer era).
Loved the piece. That said I would argue that Apple is right now probably the closest to Megahard. At some point in time optimizing the legacy of Steve Jobs and discrimnatory pricing will just not cut it any more...
very astute observation, and you might be right the large tech companies will outdo the broader market their products are "sticky" they produce immense value for the consumer and cand buy out the competition. lets grab lunch in a few years to discuss how their story unfolded.
Great post. Seems the biggest fear these days is "selling too early". Doubt that will still feel like the biggest fear 20 years from now in a more "average" market context.
I just joined ..Ive been an investor in the TMT space for 25 years.. neve hit the ultimate grand slam ... but I did ok...
Whats the next MSFT AAPL etc .. that u feel worthy of investing near and long term with scale and TAM mgmt etc?
Hi Paul- I’m not sure if I’ve got anything quite that long term compounding, but I post a link to all picks in the premium section every month and happy to chat over email about any of them!
https://static.fmgsuite.com/media/documents/db64b928-53d6-43a9-a4d0-a9d2f69f76ba.pdf
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.
Great read!
Honestly, I thought rather than Benjamin Buttoning MSFT from today, I just thought you were recounting (with some very small tweaks, e.g. AI/cloud) MSFT's story from 25-ish to 10-ish years ago (aka the Ballmer era).
Loved the piece. That said I would argue that Apple is right now probably the closest to Megahard. At some point in time optimizing the legacy of Steve Jobs and discrimnatory pricing will just not cut it any more...
Thanks, Andrew. That was an interesting take!
You might find those who stepped up to by META under 100 dollars over 2022 holidays will be lauded similarly 10 years from now.
very astute observation, and you might be right the large tech companies will outdo the broader market their products are "sticky" they produce immense value for the consumer and cand buy out the competition. lets grab lunch in a few years to discuss how their story unfolded.
Great post. Seems the biggest fear these days is "selling too early". Doubt that will still feel like the biggest fear 20 years from now in a more "average" market context.