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Lessons on Stocks from Studying Companies with 100x Share Price Increase
In the book, '100 to 1 In The Stock Market', author Thomas Phelps studied 365 companies whose stock price increased by over 100 times from 1932-1971. He shares insights on how they achieved this growth. The book starts with a parable about 5 Arabs, teaching the lesson that those who ask for little get little, those who ask for much receive much, and those who ask for too much get nothing.
On today’s episode, Clay reviews Thomas Phelps’s book - 100 to 1 in the Stock Market, and also highlights writings put out by Akre Capital Management.
IN THIS EPISODE YOU’LL LEARN:
00:00 - Intro.
02:30 - Common characteristics of companies that increased their share price by 100x.
11:11 - Why most investors aren’t able to hang onto their winners as Phelps suggests.
14:05 - Why good stock selection is much more important than good stock market timing.
31:36 - Mental models Phelps uses to figure out the odds when investing.
42:47 - Why we should invest with companies that align with our own values.
45:29 - When to look for potential 100 Baggers.
47:39 - The four categories of companies that were 100 Baggers in Phelps’s study.
52:53 - Who is best equipped to be individual stock pickers.
56:57 - Chuck Akre’s three-legged stool approach.
60:15 - Takeaways from two of Akre Capital’s brilliant articles - ‘Why Compounding is so Difficult’ and ‘The Art of (Not) Selling’.
Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.
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