This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Three Reasons to Invest in Established Companies

  NEW YORK (TheStreet) -- There is a reason that the portfolio of Warren Buffett's Berkshire Hathaway (BRK.B - Get Report) is stuffed with industry leaders such as Walmart (WMT - Get Report), Exxon Mobil (XOM), Wells Fargo (WFC) and Coca-Cola (KO), among others.

Three reasons have to do with Buffett's investing dictate -- "It is better to buy a wonderful company at a fair price than a fair company at a wonderful price."

The first is that the best got to be that way for a reason: They established strong brands. Coca-Cola, Walmart and Exxon Mobil are examples of that. Those brands have staying power which give the companies a competitive edge.

Next is that "creative destruction" is for venture capitalists, not investors.

Venture capitalists prosper by getting in early and staying late with that rare company that becomes the next Amazon (AMZN) or Google (GOOG).

Creative destruction destroys the previous economic order, as Amazon did to retail and Google did to other search engines. For those who pick right, the rewards can be huge. But the average venture capital firm fails to return investor capital after fees.

There is plenty of fluctuation in the prices of established industry leaders that allows for buying low, however. As examples, Caterpillar (CAT), the biggest heavy equipment maker in the world, and BHP Billiton (BHP), the largest natural resources entity, have both moved 50% more than the stock market as a whole, giving investors an opportunity to purchase shares at a discount.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BRK.B $143.88 -0.25%
WMT $67.21 0.03%
AAPL $93.24 -0.41%
FB $117.81 -0.21%
GOOG $701.43 0.82%


Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs