The 12 Days of Investing

- DAY 2 -

Large Growing Markets

It's always better with a tailwind.

A key attribute we look for when investing is companies addressing a large, growing market. Why? Because this is the runway to possible returns. We often talk about investing in compounders, companies we have assessed as having a potentially long-term, identifiable growth rate. But making that analysis is based on a wider exploration of the target market and also the competitive landscape, and applies to companies of any size.

We research the history of the industry vertical and the current market, as well as making thoughtful, educated predictions about where the future is going. Ultimately, we are trying to ascertain whether the market is large and whether it is growing, especially for investments with longer term holding periods such as public equity compounders or private equity.

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On the other hand, it was clear that some global firms with fast growing, profitable operations in China like Starbucks have durable competitive advantages and plenty of runway, despite fears of new emerging local competitors.

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