A life changing investing rule
Could this simple rule serve up huge long-term winners?
Disclaimer: This article does not investment advice in any shape or form. The companies mentioned are included for illustrative purposes only. Their inclusion does not represent any opinion on their marketable securities.
Today’s investing muse is all about Richard Koch’s Star Principle.
The Star Principle aims to help people invest their money and energy in ways more likely to pay off big time. Here’s the gist of it:
The Star Principle suggests you should only invest in Star Companies.
So, what is a Star Company?
Koch defines a Star Company as one that is the clear leader in a fast-growing niche. Preferably with many years of market growth to look forward to.
Now, survivorship bias is a wonderful thing…
But don’t some of the market’s biggest long-term winners show the Star Principle in action?
Here are some horribly basic examples:
Google — the clear leader in Internet search
Netflix — the clear leader in online streaming
Facebook — the clear leader in social media
But it isn’t just FANG stocks…
Take a look at Autodesk, the clear leader in CAD software. Salesforce, the clear leader in CRM. XPEL in car wraps. Or Collector’s Universe in the trading card world.
Mr Koch had a lot of success using the Star Principle in the Venture Capital markets. But when it comes to public companies, he might be on to something too.
If you haven’t already, make sure to check out The Star Principle on Amazon.
But first, let me know:
What potential ‘Star Companies’ are on your radar?
Have a good one,