s last blog focuses on both investing and managing a business. I believe that the two aspects reinforce each other. It was Warren Buffett who wrote, “I am a better investor because I am a businessman and a better businessman because I am an investor.” The qualities required in one area often apply very well to the other.
Here are two observations that the management of COTE 100 instilled in me for investing… Or is it the other way around?
Growth Is a Necessity
There was a time, several years ago, when we considered slowing the growth of COTE 100. We had reached a sufficient size to be comfortably profitable. Also, growth brings its share of challenges and problems to be solved. Why try to go further when we are fine where we are?
Here I will use analogy (another one) from the world of tennis. A player who has reached the top echelons of the world rankings cannot afford to take his foot off the gas and ride on his recent successes. The world of tennis is highly competitive, and a few weeks of relaxation will often result in a gradual, then sudden, slide in the rankings. In tennis, as in business, you cannot hope to stand still. You must constantly seek to improve and develop.
I would add that it is the growth and development projects that make running a business stimulating.
The growth of our company has allowed us and should continue to allow us to reinvest in the quality of our services to our investors and in our stock market investment processes.
Over the years, this search for growth has increasingly guided our stock market investments. Companies that fail to generate positive and sustained organic growth are, in my view, likely to decline over time. Typically, the stock of this type of company will trade at low and seemingly attractive valuation ratios. Most of the time, it’s a trap, what we call “value traps”.
In a hyper-competitive world, standing still means going backwards.
Think “Win-Win-Win”
One of the values that underpin all our decisions at COTE 100 is the “win-win-win” model. In everything we do, we seek to make decisions that will first benefit our investors, but which will also benefit our company and the community as a whole. When thinking about developing any new service, we first ask ourselves this question: “Would we ourselves be interested in investing in such a product?”
In investing, much has been said in recent years about the concept of ESG, the famous environmental, social and governance criteria. I admit that we do not subscribe to the various services offered by third parties who certify ESG investing with a portfolio manager. For me, this is primarily a marketing ploy.
For several years, we have instead added a question to our checklist that guides all our investment decisions: “Are the company’s products/services a “WIN-WIN-WIN” for everyone (companies, shareholders, employees, customers)?”
I believe that this WIN-WIN-WIN test represents the ultimate test that should dictate a company’s decisions and any investment decision in the stock market.
I really liked this “35 years in existence of COTE 100” series because it forced me to reflect on the most important lessons that we have been able to learn from our long experience in business and investment. I hope these four blogs can be of use to you in managing your business or your portfolio.
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Philippe Le Blanc’s Blog is published in
