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TIP544: Life-Changing Returns in Cyclicals & Spinoffs
We Study Billionaires - The Investor’s Podcast Network
The Importance of Not Losing Money
All fast growing companies eventually have growth slow, and this can lead to a painful transition for investors and potentially even result in a lost decade for that stock or type of industry or sect./nHowever, a company can do exceptionally well with their growth, but the stock can still go nowhere if you're buying at a really high price./nOur goal as value investors should be to compound at a moderate but steady rate of return over a long period of time, which is vastly superior to generating a sharp outperformance for a year or two, but these outlier high returns just aren't sustainable and they aren't really reliable./nOver Buffett's career, he had an average annual rate of return of nearly 20% per year, which is far superior to any other investor and is actually not sustainable over a long time horizon./nMost of us aren't like Buffett unless you happen to be one of those handful of people that happen to be as brilliant as him./nGotta mention that only 5% of Indian listed companies above some sort of size threshold, only 5% were able to grow their earnings by more than 20% annualized over the previous 10 years./n% of companies had earnings decline./nInvesting success over long periods of time is really extraordinarily difficult, and when a bull market comes, it tricks investors into thinking that investing is really easy./nConsider a thought experiment where one investor earns 20% for two consecutive years and another.
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