In their latest presentation titled – The Triumph of Experience Over Hope, Lindsell Train discuss how to find companies that will survive in the long-term. Here’s an excerpt from the presentation:
In closing however, I want to acknowledge an obvious criticism to all of this, that clearly there is survivorship bias at play. It’s all very well to look back at dividend and share price stats from now successful companies, like the LSE or Pepsi, but how do you pick the winners beforehand?
How do you predict this before the event?
And, that I would argue is precisely the point. That working this out in advance is extremely hard, if not impossible – so why try?
Why not embrace the inevitable survivor bias, and only pick from a universe of companies that have already succeeded?
Work on the basis that their age and permanence make them more reliable, more durable, and that you have time on your side as an empirical judge of this. And so, when we look at our portfolio of successful survivors, we view their best years as still ahead of them.
They are all in possession of deep and deepening moats, based around unique heritage-enriched brands, IP, and self-reinforcing networks. We have owned all but four for over a decade already and hope to still own most a decade from now as well.
You can read the entire presentation here:
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