Thread by @SteadyCompound

I've analyzed 100+ stocks that beat the market.

I always try to ask:

"What separates them from the rest?"

Here are 5 traits that stood out to me:

Customer-obsessed management.

Customers are why companies deserve to exist.

Seek out companies that are fanatical about creating value for their customers.

E.g. Every $AMZN meeting has 1 empty chair for the 'customer'.

"Start with the customer & work backward" — Bezos

Willingness to disrupt themselves.

Netflix started out with DVD rentals.

Reed Hastings saw the opportunity with streaming and was willing to disrupt & cannibalize their existing business.

Many others didn't: Nokia with touch screen, Kodak with digital cameras, Blockbuster.

Capacity to suffer.

When Starbucks entered China, its stock price took a beating.

Wall Street didn't like the huge capital outlay that was needed.

Management recognized that China was an important market.

Today, China has become a major growth engine for the mermaid.

They have a cult-like fanbase.

Think of Apple, Tesla and Peloton.

Companies that have a cult-like following generate extremely high ROI on marketing spend.

"The secret to marketing success is no secret at all: Word of mouth is all that matters." — Seth Godin

Great capital allocation.

Since 1965, Berkshire compounded at a CAGR of 20%.

$BRK did this by:

•Buying great businesses at fair value
•Buying back shares when Mr. Market is depressed
•Doing nothing when Mr. Market is exuberant

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@steadycompound

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