“Time is the friend of the wonderful company, the enemy of the mediocre”. It is the perfect time to recall this wonderful quote by Warren Buffett.

Interpreting a fine thought itself is an art. A company which did wonderfully in a growing economy may well fall into bad times when the economy shrinks. Economic circumstances may force mediocrity on it. The present circumstances can change even the virtues of businesses and alter their standing. Often, such changes tend to last for years before mediocre becomes wonderful again.

When a wonderful company hits a serious roadblock in its growth path, it tends to fumble for a while, picks up the pieces, and then creates newer engines to bring growth back. Between 2007 and 2011, we saw this happen in FMCG companies.

Such phases can be excruciating for investors. They need to invest more time with the prospects of lasting uncertainty. The present economic circumstances clearly point to a phase of pain. Because the economy will shrink, recover, and then grow. The point to remember is that these three words: shrink, recover and grow, involve time.

Even if one is invested in a wonderful company, the times will be testing for the investor. The coming years offer investors ample time to shift from mediocre to wonderful companies. The opportunity before us must be utilized in a way that makes time work in our favour.

Befriending time is never easy. It is time we remember that.

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Posted on October 17, 2020

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