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Investors being urged to bank on it like Buffett at FINSIA webinar

by Lewis Panther | 26 Jun 2019
Investors should concentrate on the long-term and quality businesses for their stock market portfolios, according to the speaker at FINSIA’s latest webinar.

Andrew Page - founder of Strawman.com - passed on tips to a lunchtime audience eager to hear his take on the reasons why billionaire Warren Buffett has been successful.

Top of his lessons from the legendary business magnate is to do the requisite amount of due diligence into a prospective purchase - even before getting into share dealing in the first place.

That way, old sayings like an overnight success that has been 10 years in the making come off. 

One of the companies that TV finance commentator Page highlighted was a candy maker that has shown steady returns for almost 50 years without hitting the heights of the likes of Mars or Hersheys.

He said: “There’s a great example Buffett uses all the time. 

“He made an investment decades ago in a business called See's Candy. If you haven't been to the US I highly recommend getting a box of it cause it's very good. 

“Each year he talks about it (at board meetings) asking how much prices were raised because no matter what they charge people pay that because they know the quality. 

“They know the brand. If you're going to go on a date with your sweetheart, are you going to bring them some or get a box of chocolates from the petrol station - or you're going to bring a lovely box of See's Candy.”

In fact, when one of the shareholders in his Berkshire Hathaway fund challenged Buffett at the latest AGM, the 88-year-old relished the opportunity to defend See’s.

When he bought it in 1972, it marked a significant shift in Berkshire’s investment strategy to focus on buying well-run companies with strong brands.

“We put $25 million into it and it’s given us over $2 billion of pretax income, well over $2 billion, and we’ve used it to buy other businesses,” Buffett told the meeting that was held in May.

Page - whose online investment club has 3,000 members - said those who wanted to follow the same path needed to have the same eye on quality and highlighted Australian hearing aid manufacturer Cochlear.

They also had a near unassailable head start, he said.

“It makes these wonderful hearing aids. It's got the best technology on the planet,” he explained. 

“You and I could be super smart, super well resourced. It's going to take us 10, 20 years to develop anything that's as good as their level of distribution and develop a brand name and all of that kind of stuff. 

“Other people make bionic ears. They don't have the reputation. They don't have legally protected technology.When it comes to deciding what price they want to charge, Cochlear can pretty much charge what they want.”

To quote Buffett, as Page often did during the webinar: “Time is the friend of the wonderful company and the enemy of the mediocre.” 

The first of the three-part events series picks up again with another webinar on 9 July when Page will be looking at Behavioural Finance. 

Head of Events and CPD Rachael Corby said: “That we’re on our way to triple figures for webinar attendees shows FINSIA’s commitment to regional members by offering at least one topical webinar per month. 

“Our Future of Finance roadshow, which was evaluated at 4.8 out of 5, will be scaled up for an even bigger audience when Decoded’s Chris Monk will be talking about all-things digital on the 3rd July. 

“It’s mid-way through the year so we are encouraging those who have not yet fulfilled half their CPD requirements to sign up for our webinars which give you 1 CPD hour.”

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