«I wanted to share this thought with you young folks before I left and I think it is critical in setting up your mindset.
Most people look for companies they think will create the best total return, highest yield, highest dividend growth, or best valuation. … I don’t do that!!!
I focus on what a company does for a living, that has priority over anything when thinking of investing long term.
Who do you want to be business partners with?
What product or service do they they sell?
What sort of demand is there for that product or service? Is that product or service still in demand during recessions and will it stand the test of time?
This is where it all starts with me! Not the numbers, the numbers change from year to year, it’s much more important to focus on what the business does for a living, and whether their business model is sustainable. When you understand this concept, and buy into it with the companies you own, it is at that time when when you may develop some peace of mind in holding when things turn south. Every company has down cycles, they can’t be avoided, but what you need to do is buy companies that you would be willing to own regardless of what the numbers say in the short term, and be not only willing to hold during those down cycles, but to add to them as well.
I post this here, for the young folks, because the old folks are past this point. Many of them are still trying to catch up and make up. I want you to be in a position where you don’t have to make adjustments 20 or 30 years from now and no matter what happens you will still be in great shape. It starts with what a company does for a living, the numbers come later.»