Another great post

Here’s a great post by David Meier (aka TMF HumbleServant), reposted with his permission from the Zillow board.


This is a very interesting thread. I will share a few things to consider, and remind everyone that there is not perfect way to invest. There are, however, many good ways to invest.

1. Over the very long term, great companies tend to create tremendous amounts of value … sometimes much more than investors can anticipate. Over the short term, the stocks of great companies can be very volatile.

2. The book “The Rational Optimist” provides an excellent framework for thinking about long-term progress.

3. It’s very difficult to know far in advance if a company is going to be great or not. However, there are signs. And since the stock market is provides a “gaming platform” where the game is repeatable, one investing strategy is to invest in as many companies as we can that show signs of greatness.

4. I’ve always found this quote from Oscar Wilde to be very thought provoking: A cynic is a man who knows the price of everything and the value of nothing.

In a market where participants are extremely aware of every price offered and many are intent on trying to calculate the value of every company with accuracy, the contrarian focuses much more time on the quality of the business and its prospects.

5. Sometimes in the stock market it’s better to be vaguely right than precisely wrong.

6. Although I’ve learned a great deal about market psychology over the years, I still underestimate its impact.

7. The price paid always determines the return generated. It has to. Price paid is in the denominator. But we shouldn’t lose sight of the numerator in the process.

8. As with many things, balance is usually required.

9. When I focused on price and value much more intently, I was a “buy to sell” investor. As I have shifted my focus to the quality and prospects of a business, I am slowly transforming into a “buy to own” investor.

10. Reiterating: There’s not one right way to invest. There are many good ways. We call that Motley. :slight_smile:

Fool on!