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Ten insights top investors have about companies:

December 20, 2009

1. Companies can only survive in the long run by selling products and services with low margin profits.

2. Companies cannot sell high quality products and services and make enough profits to survive in a highly taxed competitive markets.

3. Companies are forced to resort to refined, difficult to prove deceptive advertising in order to maintain profits.

4. Industries are forced to lobby congressmen, senators and heads of departments and committees in Washington to minimize legislation that would force companies to spend money to improve products and services.

5. Consumers are forced to buy inferior products and services, while the media (status quo) makes sure that voters don’t elect representatives that would legislate minimum national quality standards for products and services in the United States.

6. New companies in new industries do make huge profits by selling high quality products and services for a few years until the system catches up with them and they are forced to cut corners. Top investors are aware, for example, that Microsoft has gone in that direction already while Apple or Google are still resisting.

7. Maverick  investors who know the above analysis is true, investors such as Warren Buffett and myself, avoid creating diversified portfolios with many ‘losers,’ and choose instead to create ‘concentrated positions’  portfolios with a few ‘winners.’

8. If every investors chose only ‘winner’ companies, the economy will collapse from lack of enough economic activity.

9. Caveat emptor, the above statement is a concern for economic planners,  not the concern of individual investors.

10. Prediction: A few ‘winners’ will soon be ready for an IPO. The smart small investor can ride to riches on the coattails of instant billionaires.

Enjoy! Read my books!

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