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TIP549: 2 High-Quality Compounders
We Study Billionaires - The Investor’s Podcast Network
How to Buy Long-Term Compounders
To get a decent return, it is important to determine the businesses that you like and ensure that you're paying a reasonable price for them. By getting in early when a business is undervalued and it eventually trades at a higher multiple, there can be a 100% appreciation in the stock just from the multiple re-rating. It is crucial to get the business right and hold it for a long time, as the valuation will take care of itself. However, it is important not to pay a ridiculous price like 50 times sales or 100 or 200 times earnings. Purchasing long-term compounders aligns with the philosophy of Chuck Ockrey, who looks for businesses that have historically compounded at a high rate of return.
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