Investors around the world are clamouring for income and safety with ten year bonds plumbing new lows at 1.58%. Instead of investing in government bonds I believe investors would be much better off investing in the leading multi-national companies. Just like consumers buy products from the brand names they trust investors should buy shares in companies with leading brands whose products and services they understand.
Globalisation has allowed leading brands to become even stronger with benefits such as increasing economies of scale and the ability to charge premium prices to a new class of emerging consumers aspiring to spend their new found wealth. The results can be quite striking, brand names like Disney (DIS), McDonald’s (MCD), Nike (NKE) and Starbucks (SBUX) have profits and share prices near to or making all-time highs even in this difficult economic climate.
These companies tend to have a combination of income and earnings growth which are much more likely to outpace inflation than government bonds with their current yields. They have much better balance sheets than any other sovereign government and have scope to increase dividend payouts over time. They are also much more flexible than governments with the ability to allocate capital to countries and divisions which show the most promising growth.
Warren Buffet alluded to brand strategy in his latest annual letter believing that the formula to business success involved companies operating within the four words of, “buy commodities, sell brands.” Companies that buy indistinguishable products (commodities) and have leading brands able to charge a premium for their product should continue to do well in these volatile times.
http://www.decisiveassetmanagement.com/
Disclosure: Decisive is long DIS, SBUX
The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.
http://www.decisiveassetmanagement.com/
Disclosure: Decisive is long DIS, SBUX
The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.
