One of the principles of “contrarian investing” is that if you want to beat the market and achieve great results when investing in the stock market, you cannot do the same as the rest of the investors. If you're only investing in hot, world-renowned large-cap companies, don't expect to outperform the market consistently. In this article I am going to talk about a type of company that I call “Susan Boyle companies”, a type of company that offers great potential for investors who are willing to look beyond appearances.
¿Quién es Susan Boyle?
Mr. Market and, therefore, offer a good investment opportunity.
Reinsurance or collection of dead horses? Charlie Munger's Lesson
Charlie Munger, partner and right-hand man of Warren Buffett, sums up Susan Boyle's business investment philosophy in the following sentence:
“The reinsurance business has the defect of being too attractive-looking to new entrants for its own good and will therefore always tend to be the opposite of, say, the old business of gathering and rendering dead horses that always tended to contain few and prosperous participants.”
That we can translate as:
“The reinsurance business has the defect of being too attractive to new competitors due to its positive characteristics and therefore it will always tend to be the opposite of, for example, the old business of collecting and disposing of dead horses, which always tends to contain few prosperous participants. "
Don't leave Susan Boyle out of your investment portfolio
Now that you know the concept of Susan Boyle companies, it is time to look for these types of companies to be part of your investment portfolios. Of course, never pay more than your intrinsic value for them and make sure you always have a good safety margin in investment.
In a future article I will show you an example of a Susan Boyle company to help you better understand these types of companies.