I know companies I've worked for, worked with and those whose target market includes affluent people I know - the people who always have more money to spend, if the pitch is compelling. That's a good target market.
It's like Peter Lynch's approach.
I've dealt with the people of Abbvie during the 1990s when they were Abbott Labs. They don't see themselves as a pharmaceutical company trying to solve mankind's many health problems. With respect, they're money weasels, well suited to 50% of their company selling fillers and Botox to upscale cash patients. Their change of course has taken a long time. They'll eventually rise in value until their dividend yield matches other drug firms - perhaps even higher.
A contrary example. It would take an hour for me to drive to a Walmart from my home and the one time I did I was disgusted with the junk store displays of crap in broken dirty boxes. Maybe some are better - which for me would even be worse. A company without uniform standards. Walmart has been a solid growth stock, but unlike Home Depot they're a retailer I don't understand, I don't understand their target market and I don't like their practices and ethics being China's main vehicle to devastate our economy.
How could I invest in Walmart, a company I don't understand? Every time the stock would dip I'd doubt the company rather than seeing a buying opportunity. At a younger age I invested in them using charts and Value Line sort of momentum measures, but I can't bring myself to do that anymore. Too much work.
It's an out to use Vanguard ETF's to achieve diversification, by being blind to the shit they hold in their portfolio. but their returns can't keep up with my holdings and selling of about 25 exceptional firms I really know about. I've always compared my performance with similar "funds" to keep honest. If I can't do better, why am I wasting my time. I should just instead invest in an S&P 500 fund and go have a happy life. If Trump had done that he'd have three times as much money as he has, but like many he was driven to destroy things with his own "personal touch" like many. Twisted.
I also know about a lot of companies that used to be exceptional and aren't now - they rarely ever come back. Ultimately you know in your heart they'll never get off Gilligan's' Island.
At Chevron New Ventures I've done what Buffet's staff does - take apart the financials of an unfamiliar company and come to understand what really makes up their business model. But as you say, that's a lot of work and more than 99% of the companies prove not to be worth a second look.
It's better for me just to rely on my lifetime of experience and contacts. I'm an infinitely better investor now than I was when I was 16, having read Forbes magazine since I was 12. So I started with one of the official misinformation streams.
When I managed projects for Chevron and read, what was substantially the press packet I wrote, published under someone else's byline scales fell from my eyes and I suddenly understood what the "news" actually consists of. You always have to ask yourself whose press packet this "news story" originated from.
We've run out of other people's Social Security taxes needed to subsidize our low income tax rates.
