The genius lies in its simplicity at protecting us from our own vices that include impatience, boredom, groupthink, herd behavior and short-termism. This isn't all that different than the punchcard idea proposed by Buffett that I quoted at the top of this post - I know most are familiar with this quote. If you translate this same idea to stocks - you basically find the best stocks you can and let them sit and marinate for a long time - Mayer proposes 10 years. The idea is a reference to the Old West when people would put all of their valuable possessions in a coffee can under the mattress and not really touch them for a long time. The notion of the "Coffee-Can Portfolio" was originally introduced in the 1980s's in a paper by Robert Kirby (a portfolio manager at the Capital Group). It is called the "Coffee-Can Portfolio" and it is referred to as a crutch that can help with the "holding on" part that most investors (including myself at times) are quite terrible at. There is one part of the book that I've become quite intrigued by and enamored with.
SCUTTLEBUTT COFFEE FULL
Most investors sell far too early to reap the full gains that they would otherwise make. This latter part of "holding on" is where most investors fall flat. The core principle to making 100x or more on your investment is identifying companies that have a long growth runway and holding on through thick and thin. It builds on the work of a previous writer (Thomas Phelps) who wrote "100 to 1 in the Stock Market" - a book that fortunately is still in print after a long hiatus. To sum it up though - the book goes back into history (to 1962) to study stocks that have returned at least 100x to analyze what they have in common and to better enable the identification of these types of stocks in today's market. Fortunately the "This is no longer the property of the King County Library System" stamped inside alleviated my guilt. Mine looked like it was stolen from the local public library. Unfortunately the book is not in print anymore so you'll have to pick up a used copy. Thanks to AMM Dividend Letter for recommending it. I recently finished reading 100 Baggers by Chris Mayer- a decent and easy read (even for the novice) that can probably be polished off in a couple days. This idea of making investments and not touching them for a long time to let the magic of compounding do its work is the core idea of the "Coffee-Can Portfolio". Ideally it is companies that can stand the test of time and meaningfully grow their earnings and value over time thus maximizing your return. Under those circumstances, what five companies would you pick? Easier said than done. That's a heck of a long time for a lot of things to happen. You have to hold on to those shares through thick and thin until 2028. What if I told you to buy the shares of five companies but you can't sell those shares for 10 years?
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