MOI posted this excerpt of a letter to clients written by legendary investor Tom Russo, who has owned stock in consumer products giant Nestle for four decades. Russo looks at what makes Nestle’s culture unique, with much of that coming from former chairman and CEO Peter Brabeck. There were three things that stuck out to me.
1st and 2nd: Russo admires companies with two characteristics critical to long-term success: 1) the “capacity to suffer” and 2) the “capacity to reinvest.” Capacity to suffer means you are incurring short-term pain in order to achieve long-term gains in the future. Capacity to reinvest means there are ample opportunities to reinvest one’s capital for future growth. I think this can be viewed from a personal standpoint too. Do I have the capacity to suffer in the short-term for a better life and greater wisdom in the long-term? And where do I have the greatest opportunity to reinvest my time and energy for a brighter future?
The 3rd thing comes from Brabeck. When asked how he evaluates his company’s future, he says he takes a 35-year outlook and breaks it down into 5-year increments. It is hard to be specific when looking out that far, but I doubt your long-term future is done a disservice by thinking that far into the future (even in broad terms) every so often.