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From Mark Ford, founder, Palm Beach Research Group: My business partner, Bill Bonner, and I were speaking about our company’s future. Agora is a $400 million-plus publishing business with high profitability and good growth.
By any conventional standards, it’s a great business. But Bill isn’t satisfied.
His goal is to make Agora a business that’ll last more than 100 years. Very few businesses can do that.
To accomplish Bill’s goal, Agora will have to develop what Warren Buffett calls a “long-term, durable competitive advantage.”
Coca-Cola is a perfect example. It’s been selling the same product since 1892. It spent money inventing its core product over 100 years ago. Today, it spends very little on research and development. And since the machinery required to make Coke rarely needs updating, the company has low manufacturing costs.
These factors give Coca-Cola a big long-term advantage. The company can devote all the money it doesn’t spend on research, development, and manufacturing to marketing.
This is how Coca-Cola stays way ahead of its competition.
And it got me thinking about investing.
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Coca-Cola is one of the companies Warren Buffett invested in many years ago. After losing money in some speculative opportunities, Buffett realized he’d be much better off investing in businesses that were more established and had distinct competitive advantages—businesses such as Coca-Cola, Kraft Foods, and American Express.
Berkshire Hathaway, Buffett’s holding company, owns these kinds of businesses. He buys them, then holds them. If share prices drop, he doesn’t sell. He buys more shares.
His goal isn’t to make year-by-year profits… it’s to own more and more shares of great companies.
This strategy is different from what most professional investors use. But it works very well. Everyone acknowledges Buffett is the most successful investor in history.
It’s also a simple strategy. You buy a handful of great companies, then buy more shares in them when prices are good. You don’t need to worry about short-term fluctuations.
By taking a 10- or 20-year investment perspective, you’ll become rich… easily and automatically.
The Legacy Portfolio is now closed to new members, but you can sign up for our waitlist right here. And all paid PBRG subscribers can view my own Legacy asset allocation, right here.