In 1972, the See's Candies thesis was one question: could a $1.95 box of candy sell for $2.25?
On 16M pounds, that's $4.8M more pretax profit on a $25M purchase.
By 1998, Buffett expected See's to make ~$60M pretax, still needing almost no capital.
His twist: the moat isn't fixed. It widens or narrows at the counter, with every smile or snarl at the last customer in line.
Thirty success stories leave one question unanswered: how many people took the same risks and never recovered?
Persistence matters, but a list of winners cannot tell us whether their strategy works. That takes the failures too.
The useful lesson for investors: judge the decision process, test your assumptions, and keep enough room to survive being wrong.
@orvexus The clause sets the deadline. Your cash buffer determines whether you can meet it without selling. Being right about the asset won’t pay the margin call.
The most dangerous word in 2008 was “tomorrow.”
Wall Street held long-term mortgage assets with money it had to keep borrowing. When lenders stopped renewing those loans, firms had to sell into falling markets, spreading the damage.
That is what makes this story bigger than a handful of winning shorts: a portfolio’s survival depends on who can demand cash, and when.
Who gets to force your next sale?
@hivipilled Exactly. Your time horizon is only as long as your funding lets it be. If someone else can pull the credit tomorrow, they get to decide when your long-term bet ends.