Great Theme = Great Investment?

Dave Hutchison, CFA |

In investing, transformative waves periodically sweep through.  With the genuine promise of societal change.  Think of automobiles and aviation for starters.  And of course…the internet craze about a quarter century ago.

The link below is to the last page of an article written by Warren Buffett in Fortune near the top of .com mania in 1999.  He notes the large number of companies investors could have bought (and lost their money) in the auto and aviation industries over 100 years ago.  His pen-penultimate paragraph sums up the challenge of profitably investing in themes of change: 

“The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage.  The products or services that have wide, sustainable moats around them are the ones that deliver rewards to investors." 

Article Link