(03-16-2020, 01:52 PM)Binary Wrote: This question is intentionally oversimplified. Some of you advise quite simply to buy quality companies. The market offers good businesses now and I assume we all have limited cash, so quality comes first (or maybe not...). However, what does quality mean for each one of you?Quality is the ability to survive financial Armageddon and still be the industry leader when the dust settles. You have to exhibit some restraint when the market will allow you to go too far in debt. It happens over and over when companies over-leverage.
XOM is quality even though the market is absolutely horrible right now. They've lived through this. You might lose your dividend for awhile but you won't wake up next month and they are BK or the stock is two bucks. OXY is junk by comparison
MSFT and CSCO are quality, though I rode out some tough years. I've watched them dance on the graves of 50+ companies that challenged them. They will buy you for pennies on the dollar or run you out of town when times get hard. I've owned some of their competitors but unfortunately they are BK now. I could type a dozen tickers that are delisted but once traded for big bucks
Delta Airlines has a great balance sheet Their competitors will pray the government saves them A BK bailout means they live on and your shares are worth zero. See GM episode.
You don't have to be an aristocrat to be "quality", but they all have a few things in common and the balance sheet always matters because they never know when the next financial virus is coming. Its rarely more than ten years away and investor memories are too short.