In investing strategy that is simple to understand but hard to follow
Once a great opportunity has presented itself and you buy a company – what do you do?
The answer is incredibly simple but incredibly difficult to follow:
Munger describe this as: “Assiduity is the ability to sit on your ass and do nothing until a great opportunity presents itself.”
Doing nothing is a core principle of dividend growth investing
. In fact, “doing nothing” is the Buffett-Munger
approach to buying high quality businesses trading at fair or better prices.
When you buy a high quality business, all you have to do is sit back and let it compound your wealth.
The “Doing Nothing” investment strategy has the potential to make you a millionaire
It’s the largest health care business in the world with over 120,000 employees and 260 businesses in 60 countries. The company has a market cap of $329 billion, generates over $70 billion a year in sales, and around $15 billion a year in profits.
It’s been a “buy and never sell” company with 31 consecutive years of earnings increases and 53 consecutive years of dividend increases. What’s more, a R10,000 investment into J&J shares in 1970 would be worth nearly R1 million today and that’s not including the consistent dividend pay outs.
Another example of a high quality business and one of Berkshire’s core holdings is Coca-Cola.
Coca Cola’s global reach expands in more than 200 countries at a rate of 1.9 billion servings a day. This had made Coca Cola’s market share of carbonated beverages worldwide around 48%
is the No. 1 provider of sparkling beverages, ready-to-drink coffees, and juices and juice drinks, employing around 700,000 people. Not to mention, it held the No. 1 spot on Interbrand's Annual Ranking of global brands for 13 consecutive years.
You see, these are types of businesses you can buy, sit back and “do-nothing” and watch the profits roll in.
How to be a “do-nothing” investor…
The truth is, it is hard to do nothing. It is easier to buy and sell stocks.
This gives us the illusion that we are in control, but in reality, doing less in investing is being in control.
It’s much easier to sleep at night knowing you are invested in high quality businesses that you are comfortable holding for the long run.
Companies that have a stable track-record of:
Staying-power and executing its strategy
By buying these types of companies, you’ll never worry about what the markets do and which way they go.
Until next time,