Good & Bad Growth

| February 22, 2018
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The team at Chenmark Capital recently spoke of the great nuance to managing business growth with a long-term perspective. It’s not that growth is as inherently good or bad as it may seem when looking at things through the lens of an excel model. Rather, growth is something that must be purposeful and in tandem with core values.

As Yvon Chouinard (Founder of Patagonia) aptly noted in a recent podcast, “There’s 2 kinds of growth, one where you grow stronger and one where you grow fat.”

Warren Buffett has his own perspective on growth. “Business growth, per se, tells us little about value. It’s true that growth often has a positive impact on value, sometimes one of spectacular proportions. But such an effect is far from certain. Growth benefits investors only when the business in point can invest at incremental returns that are enticing – in other words, only when each dollar used to finance the growth creates over a dollar of long-term market value.”

Finally you can think like Amazon founder Jeff Bezos. He doesn’t focus on quarterly results as his thought right now from a business perspective is how to grow the company in two years. His mantra is, “Your profit margin is my opportunity to grow.”

 

Stay Tuned, Disciplined & Patient! {TJM}

The Investor & Character Equation (ICE) | S + R = O

 

Disclosure
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