![]() See "Sources of Enduring Business Success" that discusses this in more detail. It's a good reminder to have a big picture thesis. And while this is a necessary part of the job to fully understand the companies we own, it's important to remember that the best investments and the best businesses tend to have just a few things (sometimes less than a few) that really matter. For those of us who do practice investing as a career, we do pay attention to the little details. They were able to zoom out and remember the main core advantage that truly mattered. These investors may not have even paid much attention to those fundamentals. This probably helped the investors avoid selling these stocks when they fell 50% or more during the 1970's or when the fundamentals looked especially challenged in the early 80's (see my comments in last post on Buffett's 1980-82 letters the insurance business didn't look pretty then). The simple insight they had wasn't going to change over the course of a quarter, a year, or even a business cycle. ![]() Simple but powerful insights can be valuable and also long-lasting (if an investor has the right temperament). They probably felt that their insight was valuable and would lead to a lot of growth, so they bought the stock, put it in the coffee can and owned it as if it was a private stake in a family owned company. Both investors had a very simple but valuable insight : Buffett is smart and is going to do well for a long time McDonalds food is good and is cheaper and faster than any other option and there are lots of customers who will love this. There is some truth to this of course, but it's more practical in my view to see if we can draw some lessons from these fun stories that might be useful to our own investment process. Many will immediately discard stories like this and claim “survivorship bias”. ![]() I referenced this story here because there seems to be some interesting similarities between the Nebraska farmer and the McDonald's investor. The $4,000 investment is now worth nearly $22 million (this investor wanted to sell the shares years ago, and his wife didn't want to sell: they compromised by selling half, a decision he said he regrets! - but half of those original shares remain in his coffee can). Those 100 shares (after 13 stock splits and a 2% stock dividend) are now 74,358 shares. What's interesting is these 100 shares were purchased for around $40 (a $4,000 total investment), which meant the stock had nearly doubled from its IPO price earlier that year. In short, the business had a great product that was likely to grow for a long time. He bought 100 shares of MCD because he liked the food, he was impressed by how cheaply he could feed his family for a dinner out, and he thought other customers would soon recognize this value as well. A similar success story: my dad once worked with someone who bought McDonald's stock in 1965 shortly after the IPO. In the previous post, I told the story of how a Nebraska farmer bought shares in the 1960's and never sold them.
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