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Michael Mauboussin: How to find superstar companies

During an interview with the podcast Money Maze, Michael Mauboussin discusses what qualities ‘superstar’ companies possess and how we can find them.

At the same time, he points out that many of these companies over the years have experienced very significant declines in their share price, which makes it difficult as an investor to remain invested.

I think there are two or three things that were interesting.

The first is not surprisingly, their fundamentals are quite good. They grow well in terms of earnings. They generate cash. All the things that… they invest prudently. It’s all the things you would expect to see in quality growth that they very much check those boxes. […]

The second thing that he pointed out which I think is not always intuitive is that whereas if you think about the leaderboard of the wealth creators of all time in the United States. The leading companies include Apple and Microsoft and Alphabet and Amazon so you sort of hear technology. […]

The last thing he pointed out, and Simon I think this is really interesting not for quality growth investors but just investors broadly speaking, he found that almost every one of these superstar firms at some point had undergone a very very substantial drawdown.

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