In the previous article we started a discussion on boring companies. I argued that the reason so many elite investors like boring companies is due to the consistent and sustained profits these businesses often have. I then went on to detail how boring companies have deep moats that keep competition at bay, produce limited time use products that force the customer to be repeat customers, and always produce staple products that are consistently required by consumers regardless of any current economic conditions.
To remind us again of the definition provided from our first article on boring companies:
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Both value and long term investors talk about how much they like boring businesses. We like these businesses so much because, if run correctly, they are able to reliably generate a consistent source of long term revenue. Consistency and reliability are the key terms here as these businesses can be trusted to year in and year out be steady bedrock stocks to hold.
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“Wide diversification is only required when investors do not understand what they are doing.”
Warren Buffett
Questrade
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