Like Pavlov’s dog, these “investors” learn
that when the bell rings-in this case, the one that opens the
New York Stock Exchange at 9:30 A.M.-they get fed. Through
this daily reinforcement, they become convinced that there is a
God and that He wants them to get rich.
Sizing all this up, I like to think that ifI’d been at Kitty Hawk
in 1903 when Orville Wright took off, I would have been farsighted enough, and public-spirited enough-I owed this to future capitalists-to shoot him down. I mean, Karl Marx couldn’t have done as much damage to capitalists as Orville did.I won’t dwell on other glamorous businesses that dramatically
changed our lives but concurrently failed to deliver rewards to
U.S. investors: the manufacture of radios and televisions, for
example. But I will draw a lesson from these businesses: The
key to investing is not assessing how much an industry is going
to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and,
above all, the durability of that advantage. The products or
services that have wide, sustainable moats around them are the
ones that deliver rewards to investors.
I see them entering a world in which the public is less
euphoric about stocks than it is now. Naturally, investors will be
feeling disappointment-but only because they started out expecting too much.
Grumpy or not, they will have by then grown considerably
wealthier, simply because the American business establishment
that they own will have been chugging along, increasing its profits by 3% annually in real terms. Best of all, the rewards from
this creation of wealth will have flowed through to Americans
in general, who will be enjoying a far higher standard of living
than they do today. That wouldn’t be a bad world at all-even
if it doesn’t measure up to what investors got used to in the 17
years just passed.
