There’s about five companies right now–Boeing, Nike, Berkshire Hathaway, Tiffany, and Diageo–that I imagine will collectively outperform the S&P 500 over the coming ten years and I hope to cover in regular detail this summer provided their valuation remains attractive.
What I like about those stocks is the sheer quality of the holdings–they are top-shelf, old timey, trust-department-officers-in-the-1940s-would-put-widow-assets-in-these-stocks type of investment holdings that will almost assuredly destroy the performance of the hottest social media and Silicon Valley stocks over the next 25 years.
I’ve written before that retirement asset investing is best performed in a certain order. Instead of asking yourself “What’s cheap?” and then sorting through to find a business of sufficient quality, it is much wiser to first ask the question “What are the six to eight dozen businesses I’d be interested in owning over my lifetime?” and then working your way through that list to find out which ones are trading at the best deals and proceeding accordingly. There is a place for small-cap and moderate earnings quality investing, but core retirement investing ain’t it (the one exception would be someone who put an allocation in a small cap index fund as part of their 401(k) offerings).
One of those businesses is Diageo, a lucrative alcohol stock with an extremely successful track record through Guinness that has lots of families very, very financially comfortable over the years while taking on nearly minimal business risk.
I aim to write about Diageo as time permits, but for now, I have put together a podcast to discuss why the beer industry gets investment priority, why it is difficult to invest in most alcohol stocks right now, and specifics of Diageo that make it unique among its peers.