The importance of buying great companies AND holding for a long, long time; Compounding Quality's Pieter Slegers' list of 10 stocks with a return on capital of more than 20%; My thoughts go out to whoever bought two pizzas with bitcoin 15 years ago
1) Regular readers know how much I love charts from Creative Planning's Charlie Bilello...
I often share them in my daily e-mails. And one that I recently came across is an interesting bit of trivia – and also underscores what I've long preached is the key to successful investing...
Buy great companies and hold their stocks for a long, long time.
I've hammered on this point in more e-mails than I can count. And it's always interesting to visualize it on charts over the various media outlets I scan. Here's the chart in a post from Bilello on social platform X last week...
When it comes to buying great companies and holding their stocks for the long run, I have to confess that I've been better at the former than the latter.
Over the years (in some cases, dating back to the late 1990s!), I have owned or recommended seven of these nine stocks in Bilello's chart – all but Tesla (TSLA) and Broadcom (AVGO).
(As regular readers know, I'm fascinated by Tesla. But I've been far more content to watch from the sidelines rather than be a hero and say it's a good long or a good short.)
But out of those seven, other than Berkshire Hathaway (BRK-B), I failed to hold them long enough to really make a killing. Shame on me – so don't make the mistakes I did.
As I've said time and time again, you have to let your winners run!
2) Along these lines, here's some great advice from the late Charlie Munger in this 78-second video recently posted on X:
As Munger says in it:
I don't like even looking for exits. I'm looking for holds.
3) My friend Mohnish Pabrai echoed similar sentiments during this 71-minute interview with the We Study Billionaires podcast – here's the transcript of the relevant segment, starting at the 12:54 mark:
Mohnish notes that "great businesses surprise to the upside." As such, I'll underscore this important point from him on exceptional businesses:
[Do] not sell it at 90% of intrinsic value. Do not sell it when it's fully valued. Do not sell it when it's overpriced. You can possibly think about selling it when it's egregiously overpriced.
4) For more examples of high-quality businesses that earn more than 20% returns on capital, here's a list of 10 from a recent post on X by Pieter Slegers, who writes on Substack under the "Compounding Quality" name:
- Alphabet (GOOGL)
- Eli Lilly (LLY)
- Home Depot (HD)
- Hermès (RMS.PA)
- Accenture (ACN)
- Apple (AAPL)
- Arista Networks (ANET)
- Cintas (CTAS)
- Ferrari (RACE)
- Booking Holdings (BKNG)
Longtime readers know that I've been bullish on the first company on the list for years: tech titan Alphabet.
At a quick glance at the list, drugmaker Eli Lilly and travel website Booking Holdings also piqued my interest.
What about you? What are your standouts from the list?
If there's one that you want me to take a look at with my usual analysis approach in these e-mails, let me know! As always, you can send me an e-mail by clicking here.
5) If you're ever feeling badly about missing out on a great investment or selling too early, consider the anecdote in this post on X from late last month:
My thoughts go out to whoever bought a couple pizzas from Papa John's with 10,000 bitcoin all those years ago!
And what a change since then for the cryptocurrency – from "pocket change" for buying pizza to an entire investment class...
Best regards,
Whitney