Ability to Change Itself

My last second blog article discussed briefly about boom and bust of the listed company. Today, I clicked and then read a website on my cousin's Facebook status and. It neatly describe the boom and bust of a company.

If we are keen in investing in compounders, we must know why companies turn good to great as well as why companies turn great to bad. I am pretty certain that most companies with moat may face near-death for various reasons.

That link focus on the history of Motorola. Motorola is the stock which late Philips Fisher made huge profit on the investment of Motorola. One thing is very clear - Motorola may have made big changes itself while being in the technology industry for many decades but, at the last stage, it failed to recognise the need to change itself. Although Warren Buffett is well known to be averse from investing in technology related stocks, the ability to change itself seems to be main reason for him to buy IBM for Berkshire Hathaway.

I am getting more certain that if we were to hold compounders for few decades, we need to watch out the company's ability to change itself.