Is it possible to achieve returns of a 1,000% (10x your original capital) from your investments? These returns are possible, and even likely, if investors behave correctly.
Select Outstanding Companies
Firstly, 1000% returns are not possible by investing in mediocre companies. The selected companies must be outstanding businesses. According to the AXIAM investment thesis, outstanding companies own great brands. Great brands represent products and services that consumers around the world will continue to need and desire and can readily access through excellent distribution. Apple, Nike, McDonald’s, Starbucks and Microsoft all appear in the list of the world’s top 100 brands and are available in 100’s of countries to millions of consumers.
There is no comparison between local companies and global businesses. For example, a local retail chain may serve hundreds of thousands of customers in one or two geographies, however, Walmart, the biggest retailer in the world, serves over 273 million customers per week in the US alone.
These global businesses also generate free cash flow and have limited and manageable debt. They become more competitive and profitable as technical innovation improves all aspects of the business operations on an ongoing basis. In this way, outstanding businesses get better and better over time.
Hold them for years
Holding onto great companies for long periods is the key to 1000% returns. Trying to time the market with frequent buying and selling will not achieve the desired result.
It is not necessary to make investment decisions many times a year. Buying a few outstanding businesses with the intention never to sell will provide the opportunity to generate spectacular returns.
The media rarely discusses returns of 1000% or more over long periods. Most of the commentators talk about 12-month returns and short-term expectations for the next quarter. They don’t talk about how companies can return over 1000% over a long period. That discussion is not news!
The purchase price is not the most critical factor in buying outstanding companies. However, notice that Microsoft has a better 10-year return than a 20-year return. Twenty years ago, was January 2000 and the height of the dot com bubble, so the price does matter. Even outstanding businesses must be bought at a price that makes sense.
At AXIAM we use the investing philosophy of great investors like Warren Buffett and Charlie Munger to harness the benefits of cash flow, dividends, time and great brands to build client portfolios that grow over the long term. We analyse outstanding businesses that own great brands, and we continuously value these businesses based on the cash flow they generate so that we can buy them when they are reasonably priced relative to their prospects. We aspire to deliver 1000% returns!
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