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is a lot of times people buy on the basis the stock has gone down this much you know how much further going to go down I remember when Polaroid went from 130 to 100 people said here's this great company great record whatever gets below 100 you know just buy every share you know and it did get below 100 a lot of people bought on that base and saying look it's got 135 to 100.
it's not 95 what a buy within a year it was 18. and this is coming with no debt I mean this is coming it was just so overpriced so what has been your single biggest mistake you've made either investing in a company or deciding to walk away from investing we spent an enormous amount of time looking at MasterCard before it went public and I've always believed that you know I had said previously I was asked by you know at a business school by a student what's the single best business in the world I said if you could own a royalty on people spending money like Visa or MasterCards greatest business in the world has that ever became a public company you want to buy that company if you ever could buy that company well became a public company and we did an enormous amount of work in the company we couldn't get comfortable with the regulatory risk I think you can do very well as a stock market investor if you find really high quality companies and you buy them at attractive prices and I think today you know is a pretty good time it's a pretty good point of entry right you know March of 20 was obviously a very very good entry point and that anyone who bought stocks in March of 2020 something I went on TV and advocated I said this is a this is a moment I think this is sort of another moment where I don't know how well you're going to do over the next three or six months 12 months it's a highly uncertain world but over the next three four five ten years it's a pretty good place to to be an investor or time to commit more capitals Equity markets although I would you gotta you gotta pick carefully you wanna own the super high quality well capitalized dominant businesses that you know will be here you know 30 years from now and that's what we own I think it's an interesting one above the Modern Life but this goes back to a different time and his man has this wonderful horse and it's just a marvelous horse got an easy gate and good looking and everything it just works wonderfully but also occasionally just gets so he's dangerous ambitious and causes enormous damage and trouble and breaks arms and legs for others Rider and so on and he goes to the vet and say what can I do about this horse and the vet says that's a very easy problem and I'm glad to help you is what should I do and the man says the next time your horse is behaving well sell it well think of how immoral that is and haven't I just described what private Equity has to do with earnings this week that were better than expected iPhone sales were still a little weak Street loved what they saw what did you think I liked what I thought too it is an unbelievable company I think it burns almost twice as much as the second most profitable company in the United States it's a wide wide Gap I mean it's an amazing business here's a company that's earnings our 60 billion ever and you can put all their products on a dining room table I mean that is that's not the way it used to be in this country I mean it's incredible to me you read all the analyst reports and they talk about what it's going to do next year nobody buys a farm based on what they think it's going to rain next year that's because they think it's a good investment over 10 or 20 years so the the relevant question when you're looking at buying part of a business what you're doing when you buy a stock is where's it going to be 10 or 20 years it may be that you don't know in which case you don't have to do anything value fund managers say is the way they're able to make returns for you is by buying significantly cheaper stocks and waiting for that re-rating is there a risk then with your strategy that you're paying over the odds that these stocks are expensive yeah you're right that's how some value fund managers seek to do it um I have to say looking at the average results of the industry not very many of them seem to manage to achieve outperformance with that and one of the problems with that strategy is this if you buy your poor company apart from the fact that it does destroy value whilst you wait if you get the your timing roughly right yeah it will make some value for you it'll create it'll create some performance for you the problem is then you have to go find another one whereas with our companies if we select them right we never have to go and find a new company we can sit there not deal and as a result cut down the cost of running the portfolio um one of the key measures we look at is the free cash flow yield of these companies which is sounds a little technical for for the non-investment professional but isn't really it's the amount of cash that the companies generate after all their expenditures each year divided by their market value so people ask me what I learned from George Soros um I thought when I went there I was going to learn what made the Yen and the Deutsche Mark go up and down and that kind of thing no what I learned was um sizing is probably 70 to 80 percent of the equation it's not of whether you're right or wrong it's how much you make when you're right and how much you lose when you're wrong
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