When deciding whether or not to invest in a company himself, Buffett and his partners follow a few simple guidelines, one of which involves trying to determine the company’s longevity.
“We sort of know it when we see it,” Buffett said during the the Berkshire Hathaway 2017 Annual Shareholders Meeting. “It would tend to be a business that for one reason or another we can look out five or 10 or 20 years, and decide that the competitive advantage that it had at the present would last over that period.”
My actual advice to the individual who will listen and follow it, is to get out of the way of the titanic historical forces and their inevitable sanguine conclusion. Secure a base of operations that won’t be overrun. Set long term objectives and see them through. It is almost impossible to change the world by doing something NOW, because many people with short time preferences always want to do so. However the competition thins to almost nothing at a 50 year time horizon.
This is very good advice if you can pull it off. But it’s also like that one guy who said he got rich by buying nicer boots that didn’t wear out as quickly…if every paycheck goes to the company store your financial acumen is a nonfactor.
That said, it’s a spectrum, not binary. There is a lot of room for arbitrage between areas of wealth and the 50-year mark is an optimal time frame to shoot for, and can be hit in many cases. E.g. If you expect 80% of the white Americans who survive Round 2 will be working in Chinese sweatshops 50 years from now, as I do, then you can spare the time to learn one Mandarin word per day and be fluent in 25 years. Even if you’re currently working 16-hour days, you can do one word per day of Mandarin.
That’s just an example though, don’t sperg too hard on the specifics of it. Absorb the mental model and generalize the strategy.