It contains a number of points we have emphasized over many years, but in today' s exuberant, highly volatile stock market, we believe they are well worth repeating, and following. In Stocks 1. Invest in good businesses with superior growth and profitability.
Some businesses have much more favorable fundamental characteristics than others.
For example, the market for prescription drugs is growing rapidly in all parts of the world and isn't subject to sales declines during economic recessions. The business is dominated by a few large companies that compete aggressively in research and development, but not with price cutting and other competitive excesses. And the profit margins in pharmaceuticals are high. That is why this industry has been one of the most rewarding for investors in the past 50 years. In contrast, demand for automobiles is growing very slowly in all advanced countries.