IN THIS EPISODE, YOU’LL LEARN:

• How to identify the best businesses
• Why you need to focus on barriers of entry when assessing a stock
• Why competition is for losers
• When management is important and not important in high-quality investing
• How you want the management to be compensated
• Why insider ownership is not only important but even more so how it was acquired.  
• Why you should invest in stocks with two engines 
• What is the Berkshire Summit, and how do you attend?

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

[00:00:03] Stig Brodersen: In today’s episode, my co-host Clay Finck and I discuss how and why we should invest in high-quality businesses. It is a bit ironic that we’re doing this episode almost 10 years into the tenure of The Investor’s Podcast. I remember reading about Buffett early in my investment career and how long it took him to realize that investing in high-quality companies is the best approach. Now investing in high-quality companies intuitively sounds easy, but it’s so hard to pay off for quality. Our brains just think linearly and not exponentially, which is how we should be thinking to understand the power of Buffett’s best investments. Join Clay and me as we explore the benefits of high-quality businesses in today’s episode.

[00:00:44] Stig Brodersen: And if you plan to go to Omaha for the Berkshire Hathaway’s annual shareholders meeting, make sure to stay until the very end to learn more about our events. We talk about how you can meet our hosts, William Green, Clay Finck, and Kyle Grieve, but also guests of the podcast and this is including, but not limited to Anthony Kingsley, François Rochon, and Chris Beck.

[00:01:09] Intro: You are listening to The Investor’s Podcast, where we study the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected.

[00:01:28] Stig Brodersen: Welcome to The Investor’s Podcast. I’m your host, Stig Brodersen, and I’m here with my co-host, Clay Finck. Clay, how are you today?

[00:01:36] Clay Finck: Doing great, Stig. It’s always great to chat with you on the show and excited to dive into today’s episode.

[00:01:43] Stig Brodersen: I’m excited too, talking about high-quality investing and one of the things that I learned early on is that if you pick the wrong stocks, you’re going to lose money.

[00:01:53] Stig Brodersen: And you might be thinking, Stig, that’s so obvious. Like, yes, of course, you’re going to lose money if you don’t pick the right stocks, but I want to add something to that because it probably sounded too obvious. There is something to be said about buying high-quality businesses because if you’re right about the business, even though your valuation might be off, the company will grow into that valuation eventually.

[00:02:14] Stig Brodersen: One example could be Microsoft, it traded at a very high price compared to its value during the dot com bubble for example and it took, what, 16-ish years, depending on how you measured it before it grew into that valuation, but it eventually got there. Whereas if you bought the wrong business, you would have lost all your money.

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BOOKS AND RESOURCES

• Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, and the other community members.
• Our episode with Christian Billinger about quality investing | YouTube Video.
• Our episode on The Outsiders about the best CEOs | YouTube Video.
• Our episode about Dino Polska. A compounder with high insider ownership | YouTube Video.
• Chris Mayer’s book, 100-baggers – read reviews of this book.
• Lawrence Cunningham’s book, Quality Investing – read reviews of this book.
• Robert Pirsig’s book, Zen and the Art of Motorcycle Maintenance – read reviews of this book.
• Check out the books mentioned in the podcast here.

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