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Quality Business - Consistent-compounders


Successful companies have mostly focussed on small niches within a much larger market.
 They have been able to build market dominance in their
  • niches, 
  • command pricing power,
  • expand the niches and
resultantly generate healthy earnings growth
and returns on capital.
 The financial performance of consistent compounders has been clearly better than:
 (a) most mass-market companies; and (b) diversified large corporations

For stock price to grow in consistent compounding stocks ,

Earnings drive 80-90% (if not higher) of the stock returns generated over the long run.

As a result, provided the underlying asset (company or an index) delivers a modest or healthy earnings growth,

it does not matter whether the entry point of one investor was 20% higher or lower than another investor.

To be continued...

 Inspired from Marcellus
Marcellus 2


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