For successful investors, searching for the truly great businesses of the future will always remain the primary concern.
- Andrew Macken
In football, a successful player does not run to where the ball was, or where it is right now. They run to where the ball is going to be. The same idea is followed by successful investors. They are typically less interested in the successful businesses of yesteryear, or even today’s success stories. For successful investors, searching for the truly great businesses of the future will always remain the primary concern.
In 1957, the S&P 500 – an index of the largest 500 US-listed companies – was created. At the time, American Telephone and Telegraph (now known as AT&T) was the heaviest-weighted stock in the index. Today, AT&T (NYSE: T) still scrapes into the top 10. But today’s top 10 are dominated by new businesses, many of which did not even exist back in the 1950s, including: Apple (NASDAQ: AAPL), established in 1977; Amazon (NASDAQ: AMZN), established in 1997; and Facebook (NASDAQ): FB), established in 2004.
At Montaka Global, we believe that the price of a business and the value of a business are two different things. Over the medium term, value acts as a magnet for price; but over the short term, the two can deviate from each other – thereby creating opportunities to buy and sell. This idea is the core premise of value investing.
Andrew Macken is the Chief Investment Officer of Montaka Global Investments. To learn more about Montaka, please call +612 7202 0100.