Bill Ackman talked his investment philosophy during his lecture in Floating University (HT: Valuewalk). Ackman listed his four keys to successful investments: 1. Invest in public companies; 2. Understand how the company makes money; 3. Invest at a reasonable price; 4. Invest in a company that could last forever.
Ackman emphasized that it is very important for people to invest in a business that can last forever. People will need to choose a business that is easy to understand, has a long record of success, makes an attractive profit, and can grow over time. He used Coca-Cola as an example. “What’s good about Coca-Cola is relatively an easy business to understand,” said Ackman. People all know how Coca-Cola makes money. While the world’s population is grow, they sell products to almost every country of the world and make profit every time they sell a beverage. People get used to the taste, so the business will expect to last a long period of time. Another example mentioned by Bill Ackman is McDonald’s. As long as people need to eat, McDonald’s offers good quality food and service, and the company keeps growing every year.
These companies share some similarities: they sell product people need; their products are unique; and they have a high brand loyalty.