Nothing Beats Buying A Great Business When No One Else Wants It
Inside today’s Daily Journal…
Essay: Will CoStar Be This Year’s Best Fallen Angel?
AI to outspend defense
OPEC opens the spigot
Central banks buy up gold
Chart Of The Day… Consumer Credit Index
Today’s Mailbag
Editor’s note: Porter’s 2029: The End of America is now available as an Audible book here, or to read from Amazon here.
Today, all investors want is artificial intelligence (“AI”): Chips. Memory. Power.
But you’re paying a very high price for AI’s growth forecast. No, valuation isn’t destiny – growth investors can still outperform the market, even when they buy at high multiples. But valuation is a huge risk. When you’re buying at 50x earnings, or 100x revenue (in the case of SpaceX), there’s a long way to fall if anything goes wrong.
Call me old-fashioned, but I like proven business models. I like moats. And I like very steady, proven revenue streams that grow, year after year. I especially like these things when they’re wrapped around a great business with outstanding economics.
But today, nobody cares about that stuff. Investors just want more AI meme stocks.
Case in point: CoStar Group (CSGP).
CoStar’s core product is CoStar Suite – a subscription platform that commercial real estate professionals use to research, value, and transact on properties. This might not seem that important, at first glance. I mean, with the internet, isn’t all information essentially free…?
Not at all.
When a commercial real estate broker underwrites a building, he needs the actual lease comps: who signed, at what net effective rent, with how many months of free rent buried in the concession package. He needs the true vacancy, floor by floor, not the number on the marketing flyer. He needs the sale that closed off-market and never hit a public listing.
