Jeff Bezos mentioned his ideal investment in his latest shareholder letter. No surprise but the ideal investment sounded like Amazon! (See below). An ideal investment has four characteristics. Customers love it, it can grow to a very large size, it has strong returns on capital and its durable in time.
Source: https://www.sec.gov/Archives/edgar/data/1018724/000119312515144741/d895323dex991.htm
When investing Jeff is famous for asking what won't change in the future. For example what won't change in the future is that customers will always love low prices. So Amazon focuses their investments to improve things that won't change ie customers will always love greater selection, faster shipping and lowest prices on their site. In a fast moving world focusing on the fundamentals that won't change has paid off for Amazon and their shareholders.
Google's Larry Page has a simpler approach. Each investment has to pass the toothbrush test. They will invest in a product or company when it has the potential to be used by hundreds of millions of people hopefully twice a day. That sounds like Google to me. I use it much more than my toothbrush! Instead of worrying about capital returns and free cash flows Page takes the long term view and cares about how useful it will be not how much money it is making. Something to think about next time you're brushing your teeth.
Jason
Decisive has no position in Amazon (AMZN) but is long Google (GOOG) stock. 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.
