The question I like to come back to is am I reasonably sure this company will be making considerably more profits than today in 5years time?
We can't get to an answer without consideration of moats and risks to its continued existence and the major one that afflicts many companies and individuals is DEBT.
I also agree with many others about the ongoing perils (liquidity and accumulated cost of fees) of ETF's and Index funds, but there is a demand and that will also continue.
In principle I agree with Magellan high conviction fund management approach. Significant concentration on 10-20 companies seems to me better than having a vague knowledge of 100 or more.
Of the 10 or 20 there will inevitably be some that fall by the wayside or have low probability but high negative consequence risk events occur as MFG had with Hamish D's personal problems. We would expect that say 1 in 10 CEO's might experience health or marriage problems in any 5 year period. That's 2% for an individual in a given year. Most are skilled at delegation and in better health than the poplation as a whole so this feels about right. So there will be problems like this from time to time.
But the ability to pick up stocks that are undervalued because of Mr Market's manic mood swings is the best argument for stock picking, because over long time it delivers better outcomes for those who have the temperament to sustain the strategy through the occasional disappointments
Buffett/Munger have a tremendous success record in picking stocks in out of favour sectors to own over long periods, the key being buying them when they go "on-sale". Especially in secular bear markets good stocks of good companies go on sale as well as those of bad companies. Was Hamish and his team in same league as Berkshire Hathaway? Maybe.
Will the core team be able to function without Hamish D? We don't know in advance, but I believe or sense, or just hope, the essence of MFG is the valuation method he presumably taught, not just him as the individual.
I was impressed with the acting CEO, a woman who looked to be in her early 40's. Its a bit early to judge the new CEO, who had only just sat down a the half year. I think it will take till after the AGM for me to be comfortable with the board post it's "refresh" and a few resignations. Some board members are not especialy good or just make up the numbers or aome quota, so until I learn more about which directors are leaving and the new candidates coming onto the board I trust the Chairman and the track record of the assumed stayers,
I think tracking an index is just locking in disappointment when whole markets suffer declines as they do when we have interest rate rises or instablity. It is easy in hindsight, much harder in advance to detect individual stock or market movements will reverse their trend. I did for about a 9 month period follow a trading discipline using a data service to identify buys and sell signals over the entire ASX2000 odd listings. The time taken was greater than I had hoped, and there was no way I had time to research all the company's read reports, attend briefings and AGM's. While it appeared to be marginally profitable, the commisisons I was paying to Commsec ate up most of the trading profits. Also it was boring.
Since I have gotten on board with a Value based long term buy and hold strategy I feel more comfortable and satisfied with the results. I use Bonds to reduce the volatility of my portfolio as I am getting to late 60's and don't have the time to earn it all back if there is a big wipeout. I use precious metals as a mitigation of the risk of CBDC's going horribly wrong. I think they are just as prone as any other form of Fiat currency to debasement, and there are worrying possibilities for coercion of someone of my political and spiritual persuasion to do things I disagree with.
So long story short, I think I am with MFG a while longer. Currently down 50% in average buy price but reasonably confident that the business will recover, or be taken over and that it is not going to disappear in a cloud of debt.
(20min delay)