Investing like Buffett

Phil Town asks a really good question : Why not study and get the skills to invest like the wealthy investors, like Buffett, Graham, Nygren, Ruane? Why should not you also earn a 15% to 20% per year no matter what the market offers up? Why not be cynical about the whole mutual-fund industry and all their boldness that the investing market always goes up and that you'll always get an 8% return? Why not take control of your financial future instead of leaving it in the hands of people who have proven to be very goofy?


Phil Town says you can but the first requirement is that it be a wonderful business. We never invest in anything that we don't know is wonderful. Phil has in mind something very specific and easy to figure out when I say "wonderful." I mean a business that will continue growing at a predictable rate for 20 years. That means a wonderful business first and foremost has a PREDICTABLE rate of growth.

But here's the rub: In order to know that a business's growth is wonderfully predictable, you have to know something about the investment. It has to MEAN something to you personally because if it does you will understand it more easily and more quickly. And it should not violate your values (because that makes you a hypocrite). And understand the business enough to know that they are the best at what they do (we only go with the best).

Phil wants you to know that it has a lot of automatic protection against competition which Phil Town calls this a MOAT.

Phil Town wants you to know that the MANAGEMENT, in particular the CEO, are intent on building this business for the benefit of all the stakeholders - including and most especially the owners. You and me.

These three M's are quite simple to figure out and you will find that in a year or so you have too many wonderful businesses that you would like to own.