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They aren’t a good company if they can’t survive the macro.
by jshen 4y ago
They aren’t a good company if they can’t survive the macro.
- drakythe 4y agoThis is an astonishingly limited view of what makes a “good company”.
- jshen 4y agoNot really. If you can’t handle a down turn, how are you a good company?
- haswell 4y agoThis all gets a bit messy when trying to use a simple binary designation of "good" or "bad" to describe a company based on all factors about that company. Good companies come and go. Good companies of old no longer exist because the world changed. Some companies are good for awhile, and then lose their way. Nuance abounds. Not putting words in the parent commenter's mouth, but maybe a different way to say this is that Cloudflare is a good product. A product can be both great, and not viable under some conditions. The two are not mutually exclusive.
- jshen 4y agoGreat distinction!
- nradov 4y agoIt's interesting to look at the list of 11 companies profiled by Jim Collins in his classic 2001 business book "Good to Great". How many of them are still considered great today? In other words, is being great at one point of any value in predicting long-term success? Abbott Laboratories Circuit City Stores Fannie Mae Gillette Company Kimberly-Clark Kroger Nucor Philip Morris Pitney Bowes Walgreens Wells Fargo https://www.harpercollins.com/products/good-to-great-jim-collins?variant=32116997292066 https://www.harpercollins.com/products/good-to-great-jim-col...
- jshen 4y agoAgain, they aren’t a good company today if they can’t weather a down turn. They may have been a good company in the past, but they aren’t currently if they can’t make it.
- nradov 4y agoThat definition of "good company" is close to being just a tautology. It isn't useful to investors or business managers. Are there any consistent patterns which allow us to reliably predict which good companies will contine being good longer term?
- jshen 4y agoWhat's your definition of a good company? If people could reliably predict which companies are and will remain good then they will be very rich. Most of us can only know in hindsight for the most part. This is why virtually no one picking individual stocks beat the S&P 500 index over the long run.
- drakythe 4y agoThis is basically what I was getting at. Everyone has different definitions of "good" and to limit it strictly to "Survives the current market" is both limited and asking for abuse. E.G. I would argue there is absolutely nothing "good" about US health insurance companies, but they continue to be financially successful. My belief in their goodness, or lack thereof, has absolutely nothing to do with their finances. It is the same reason I won't invest in Crypto currencies or NFTs. The line may be going up but so is the global temp. Not good.
- mypalmike 4y agoA tech company that makes large capital outlays expecting growth might do very well in an expanding economy but get destroyed in a recession.