Trying to predict and successfully time when the next storm will arrive is not a substitute for sturdy construction. Financial storms tend to arrive with little warning. The key to resilience is to know that they will inevitably come and to prepare in advance.
We made our initial investment in Booking Holdings (Nasdaq:BKNG) in late 2017 and recently added to our position. While we have previously disclosed that we owned the stock, we have not discussed its business in any detail. Here is a snapshot of our investment thesis.
… Incentives drive behavior and the senior management of any business is responsible for putting the proper incentives in place and defining a company’s culture by setting the tone at the top.
… Media stocks remain under pressure these days. It all started back in the fall of 2015 with the selloff in Walt Disney Company’s stock (NYSE:DIS) due to subscriber declines in its ESPN division. The stocks of other media companies quickly followed suit.
… Health care is a very personal and sensitive subject. Most nations would prefer all of their citizens to have unlimited access to life saving drugs at reasonable prices. However, countries have limited means.
… Express Scripts Holding Company (Nasdaq:ESRX) is the largest pharmacy benefit management (PBM) company in North America. It serves thousands of clients including managed-care organizations, insurance carriers, employers, third-party administrators, public sector and union sponsored benefit plans.
… Cisco Systems is the world leader in the design, manufacture and sale of high-performance networking equipment for the Internet. Their products are ubiquitous and most often the industry standard. In an era of increasing usage of smartphones, tablets, and connected devices (the “Internet of Everything”) data transfer and consumption should continue to increase exponentially.
… One of the keys to being successful at investing over the long term is to stick to businesses and industries within your circle of competence. Put another way, you should invest only in businesses that you know and understand.
… Another key success factor in investing is being able to come to your own conclusions based on thorough research, hard work and proper reasoning. Conventional wisdom is often but not always correct. The difference is important.
… One mistake that people often make is to assume that the stock markets will decline when the economy is in recession or one is forecasted. Being a math geek I went back and looked at the correlation between US GDP and US stock market returns over the past 80 years. The results will probably surprise you.