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List of businesses that can be run by idiots


randallchsu
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Looking to compile a list of businesses that can withstand time and continue to compound.

 

I will start with a few in China, looking for more inputs to complete a list of businesses around the globe that can run by idiots.

 

- Maotai, 600519.cn

- Golden Throat, 06896.hk

 

Edit: I added a spreadsheet based on replies.

 

https://docs.google.com/spreadsheets/d/1gVLx7tgbQjJOC8PdR90ve89Rnb8Xt49uK7wcMrBkAcM/edit#gid=0

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The Maggi noodle crisis in India only cost Nestle $500 million (who knows how much in terms of loss of consumer trust and confidence in its brand) because management weren't complete idiots. I imagine if Nestle were actually run by ham sandwiches, the damage would have been immense.

 

Yes, Nestle is a fabulous business that offers great risk-adjusted return potential, but it still needs whip-smart management in place to deal with crisis that pop up and innovate their products to keep them relevant in a changing world.

 

Preview from the article linked above:

 

Nestlé spent three decades building a beloved noodle brand in India. Then the world’s biggest food and beverage company stumbled into a public relations debacle that cost it half a billion dollars. A cautionary tale of mangled crisis management on an epic scale.
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USA hopefully.

 

Indeed!!

 

On the business side, there are idiots, as in the moderately to severe incompetents (perhaps the best we can hope for with Trump!) and then there are the stark raving mad variety: you can't, shall I say, publicly pee into the chocolate vats at Sees or Hershey or buy AOL at the top without severely damaging the company. (If See's were a stand alone company.)

 

So with a mild incompetent in mind:

 

Google (enough momentum and intelligence both real and artificial in the ranks below)

Berkshire (enough momentum and integrity throughout)

possibly Disney, the media landscape is changing a great deal though

 

Obviously, then big companies with stable cashflows and some kind of moat around a castle.

 

Great question by the way.

 

 

 

 

 

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One additional element I would add to the question is whether the idiot wants to intervene or remain passive. In my experience, the worst idiots are the ones that don't realize their idiots and do damage by trying to do something. If you had an idiot, perhaps best if they were also lazy idiots or, better yet, monkeys.

 

This thought came to mind when I saw the comment regarding Hershey (my favorite chocolate bar), which I agree with, except if the idiot in question decided they want to tinker with the recipe or size (has anyone seen the new toblerone bar?).

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One additional element I would add to the question is whether the idiot wants to intervene or remain passive. In my experience, the worst idiots are the ones that don't realize their idiots and do damage by trying to do something. If you had an idiot, perhaps best if they were also lazy idiots or, better yet, monkeys.

 

This thought came to mind when I saw the comment regarding Hershey (my favorite chocolate bar), which I agree with, except if the idiot in question decided they want to tinker with the recipe or size (has anyone seen the new toblerone bar?).

 

Exactly. So to clarify my comment above: there are businesses that will do mostly fine when not actively run (i.e. run by passive persons); there are no businesses that can withstand active idiots. And yeah, we shouldn't use word "idiots" since they would really be good meaning, but would break the business by trying to grow (diworsify, lever, etc.) or change the products. See "Billion-Dollar Lessons" for more exhaustive list.

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Here is my 2 cents about this topic:

 

You will realize that they are all idiots (vast majority) and looking only for themselves once the business stops growing.

 

Anyone can run a business that has growing sales and profits. The returns may look a bit worst than peers if it is run by true idiots but, once you become CEO, you have a minimum salesmanship and IQ to "lie" and still make it work ok. There is also a fair amount of people looking over their shoulders to prevent a full blow up.

 

So if you can identify a business that has growing sales and profits organically, I would say that is 90% of the battle.

 

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Looking to compile a list of businesses that can withstand time and continue to compound.

 

I will start with a few in China, looking for more inputs to complete a list of businesses around the globe that can run by idiots.

 

Instead of trying to find businesses that can be run by idiot managers. I would prefer to find investing styles that can be implemented successfully by idiot investors...like net-nets or negative enterprise value investing.

 

This thread is about copying the Buffet/Munger style of investing. I think its pretty difficult to make that style work.

 

Buffett rarely used this style when he was managing money in the order of the scale/size that most of us have. He invested plenty of horrible businesses when he managed small amounts of money and his record was even better than we he managed large amounts of money. And according to Munger he was also a much worse investor during this period.

 

So unless your managing large amounts of money and you have billions in cash just laying around, I don't see the point to this exercise.

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