[Famous wine and famous medicine and consumption monopoly] In China, famous wine and famous medicine are excellent long-term investment varieties. Buffett takes Coca-Cola as not-for-sale, he knows what a great company is, and he is American; we take Moutai and Yunnan Baiyao as not-for-sale, because we also know what a great company is, and we are Chinese. Many years ago, although I knew nothing about investing, I was deeply impressed by the household names of Moutai and Yunnan Baiyao. It was Mr. Buffett who enhanced our relationship with them.
Moutai is the most typical consumer monopoly enterprise. It is a national brand of a country with a population of more than one billion, and it is known as the national liquor. Having the most powerful brand reputation and the most powerful intangible assets, this kind of advantage is called consumption monopoly. I sometimes call it consumer psychological occupation, which is to take away the soul of consumers. For example, the same product, people will buy this brand, even if the brand is a lot more expensive.
Yunnan Baiyao is one of the most famous medicines. Yunnan Baiyao has a wide moat and many unique advantages. I don’t want to repeat its “thousands of favorites”. What I just want to say is that Yunnan Baiyao is the most valuable among traditional enterprises: it has a strong product innovation spirit and brand expansion ability. The follow-up products continue to allow consumers to fully enjoy the magical effect of Baiyao, and at the same time make competitors stunned in the face of its strong attack. I believe that as long as the field is associated with hemostasis, they will penetrate in and take a share! Even if the patent protection of Baiyao itself is cancelled in the future, it will last as long as the French perfume.
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Buffett once said, “I have pursued a consumer monopoly all my life.” Consumption monopoly theory, economic franchise theory and economic moat theory are the essence of Buffett’s investment theory, Buffett’s critical inheritance and creative development of Graham’s value investment theory, and the guideline and core idea of his attention to and pursuit of great enterprises.
The concepts of consumer monopoly and economic moat are not exactly the same. Consumption monopoly enterprises are only those enterprises that are in the specific field of consumption, especially with the economic moat of intangible assets such as goodwill. The best explanation for the economic moat is the company’s sustainable competitive advantage, which includes intangible assets, switching costs, network effects, and low-cost advantages.
The threshold for consumption monopoly enterprises is still relatively high, especially liquor and traditional Chinese medicine.
Therefore, investing in stocks requires independent thinking and composure; it is necessary to simplify the complex, abandon the small to the big, and grasp the main contradiction; it needs to be patiently held, and “remain unchanged” to achieve the supreme “win without a fight”. realm.
——2022.8.7
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