"Ancrum argues that businesses that can maintain 15%+ returns on tangible assets are structurally better than almost all companies: 'These are companies that don't regress toward the mean. They don't.' The reason, in his view, is 'such a strong enduring competitive advantage' that compounds margins year after year."
"Brown referenced Jeremy Grantham's firm, GMO, calling the quality factor's risk-adjusted profile 'the weirdest efficiency in the market'. Higher returns paired with lower volatility break the traditional textbook idea that if you want higher returns, you have to take on higher risk."
"Research from Morgan Stanley and Atlanta Capital found that high-quality companies outperformed low-quality companies 3-to-1 over 35 years."
Research shows that 71% of individual stocks do not match market returns over rolling 10-year periods. Only 4% of companies from 1926 to 2018 created net wealth relative to T-bills. The SPDR S&P 500 ETF Trust has returned 251.82% over the past decade, making it challenging to outperform the index. High-quality companies, defined by sustained returns on tangible assets, are more likely to succeed. Ancrum's tiering system categorizes returns, emphasizing that companies with 15%+ returns have a competitive advantage.
Read at 24/7 Wall St.
Unable to calculate read time
Collection
[
|
...
]