Brexit on ARB, page-12

@Warrigals

Much as think there is much to commend your list of 3 rules, I believe there is a glaring omission, and that is the question of price (with respect to value). After all, without this forming part of your consideration, you are implicitly saying that no price is too high to pay. Clearly, at some point, there will be too high a price, regardless of quality.


@Warrigals and @madamswer

I too am very excited by the seemingly infinite possibilities that ARB's export market might offer. However, to assume that operations OS will replicating the domestic success, to any substantial degree, would seem to me, at best over confidence, at worst, a blind leap of faith. For whatever reason, good management, good luck, or perhaps a good dose of both, ARB has commandeered a breathtaking competitive position. Without this sort of moat OS, success will not be automatic. Further, to assume that the moat can be replicated OS (from my limited vantage point) would seem highly speculative.

I don't wish to rain on this parade, especially as I too have all those gooey feelings for ARB. But when I see a lot of enthusiasm, the contrarian in me tends to step in and remind me, that in this game, over enthusiasm and over confidence, are mortal enemies (something that I'm sure, you especially Adam, would concur with).

Let's not forget, that what we are paying for is not the ARB of yesterday, but the ARB of tomorrow. Don't get me wrong, when it comes to things driven by humans, I am a big fan of using past behaviour as the best guide of future behaviour. But, the passage of time changes everything, so there are limits.


@madamswer

Much as interest rates look like heading south and staying there, the contrarian in me starts getting worried when I hear tones of "this time is different" and "stronger for longer" or "weaker for longer" etc etc. When we buy into the consensus, we usually get moderate reward for being right, but we can really get hammered if we are wrong.

Also, I just can't hep but feel the all the global stimulus, which has been for economic activity what a canoe-with-no-paddle might be to getting-up-the-creek, will eventually have a price to pay. This time will definitely be different, until it reverses.

But I do note your comments that we are likely to be creating tomorrows asset bubbles.

Whilst quality can protect the underlying asset (which is very desirable), once again, I believe that if we don't have a keen eye on price, it may not adequately protect our investment. This especially when we consider that the crowd is clambering to the safety of quality. Our best protection may indeed be to go where the crowd dares not tread (with several cautions and caveats, of course).

I think we have to be cautious about being fooled by the recent (a la, last 10 to 15 years) history. Let's not be the chicken that clambers gleefully every day to be fed by the its farmer, only to find out one day that the same farmer is going to lob its head off.

That's why I try to only invest when I believe that I have a high probability of achieving at least 10% return, over the long term. CPI may seem to be dead (from the blind vantage point of the present moment), but currency debasement has been happening, and not on a trivial scale. To assume the inflation demon will never show up again, is I suspect, very dangerous.

Call me a worry wart. But to be honest, as a long term investor, if I wasn't worried, I would be really worried.