In a former life (no, I wasn’t an Egyptian pharaoh, I just mean before I joined The Motley Fool!), I worked in the fast-moving consumer goods (FMCG) industry.
I worked for a range of very cool brands – the company behind Johnnie Walker, Baileys, Smirnoff, Bundaberg and other alcohol brands, Blackmores Ltd, Heinz, 20th Century Fox and more. At the beginning of my career, I worked for Woolworths Group Ltd‘s (ASX: WOW) liquor division, in store, then in head office.
It’s probably no surprise, then, that, as an investor, I really value brands. I’ve seen, first hand, the success that can come from quality brands, well managed.
It also means I developed an appreciation for good grog!
No, not the stupidly expensive stuff.
But I am fond of a nice shiraz and the occasional single malt Scotch whisky.
(If there are any wine or whisky makers looking for brand ambassadors, you know where to find me! But I digress.)
The reason for mentioning all of this is that we had to replace our broken air conditioner last week.
And in doing so, I had to move some old boxes that were under the house. There were no old lottery tickets or bars of gold laying around (that wasn’t a surprise, but a bloke can dream!).
What I did find, though, was a couple of boxes of red wine that we’d brought with us when we moved here about seven years ago.
I have a vague recollection of putting them there in the blur of moving house.
I’m sure at the time I’d planned to get back to them as soon as we’d finished unpacking.
And, well… sometimes life gets in the way.
Unfortunately, they weren’t cases of Grange. No Chateau Fancypants bordeaux, either.
But they were nice wines that I’d bought on special at some point in the past.
And now? Well, they should have aged nicely, I hope, in the best part of the decade they’ve been under the house.
All thanks to my – to steal a line from Warren Buffett – ‘benign neglect, bordering on sloth’.
Again, this isn’t Grange we’re talking about. I’m not hosting any fancy dinner parties any time soon. They were probably $20 bottles back then – not cheap, but not exactly Alan Bond stuff.
Still, I’m hoping that benign neglect will have helped.
And it might have some parallels with investing (you knew this was getting back to investing, didn’t you).
No, I’m not suggesting you buy shares, put the brokerage statements under the house and forget about them.
But I’m not saying you shouldn’t.
There’s a reason Uncle Warren talks about his favourite holding period being ‘forever’.
It’s because, if you have the right company (or, hopefully wine), letting time do the hard work can be a very profitable approach.
Indeed, to really, really hit my Buffett-quote-quota, time really is of the essence:
“Time is the friend of the wonderful business… the enemy of the mediocre” says the Oracle of Omaha.
Now, I don’t recommend you buy some $4 wines and leave them for a decade. They might be good, but I’m not sure they’ll get much better with time.
Similarly, you shouldn’t expect an ordinary business to get better just because we go one more time around the sun.
But quality businesses – just like quality wines – tend to get better, over time.
And, as a rule (with exceptions) the longer you leave them undisturbed, the better your results are likely to be.
Yes, the occasional bottle will be ‘corked’ when you come to drink it. Just as the occasional promising long-term investment will go sour.
I’ll let you know how the wines taste, when I open them.
But in investing, as with wine, quality matters.
Let’s cherrypick some examples.
A 2002 ‘bottle’ of CSL Limited (ASX: CSL) would have set you back $9. Those shares are now selling for $269.
You could have picked up a 2000 vintage Woolworths for $4. Those shares now change hands for $39 each.
A 2009 Wesfarmers Ltd (ASX: WES) edition for under $10 now sells for more than $50.
These weren’t moonshot companies. Or lottery tickets. They were strong, established, quality businesses.
Giving good wine some time to mature is a smart strategy.
I reckon ‘cellaring’ a portfolio of shares in good companies is probably a very wise move, too.
Fool on!
