Space, time and… clarity

You’ve heard from me a little more regularly in this space over the past couple of weeks than in the couple of months before that.

In part, that’s a quasi-New Year’s Resolution to write more.

In part, that’s because the events and occasions (New Year, Buffett’s retirement and more) have provided some welcome stimulus.

But mostly, I think it’s not because I’ve had more ‘time’ per se, but rather more ‘space’.

Indeed, the first couple of columns of the year were written in the early mornings on holidays, when my young bloke was asleep: I had some thoughts and some opportunity, so I grabbed both.

This week I’m back on deck, but the momentum and opportunity has continued.

The opportunity has come in two ways, related to the ‘space’ I mentioned earlier.

Yes, there’s meaningfully less company news to deal with. Fewer ASX announcements. No data from the ABS.

The newspapers are thinner (or, if you prefer, there are fewer new stories on their websites).

But also, and related, that’s meant more mental space, too.

More time for independent and undirected thought.

More time thinking about the ‘important’ rather than the ‘urgent’.

Now look, at The Motley Fool, we’ve always been long-term investors. We do our best to eschew short-term thinking and tune out the noise.

So the idea itself isn’t new.

But even then, I’ve found myself with more ‘clear air’ than normal, and it was noticeable in the sorts of things I found myself focussing on.

I will say – perhaps disappointingly, sorry – that there were no blinding flashes of new insight.

I haven’t discovered the secret of nuclear fusion, nor have I invented a brand new way to get rich overnight.

But what I did find myself dwelling on were the more important fundamental aspects of investing and economics.

I’ve already written this week about the folly of predictions, and the interaction of supply and demand when it comes to housing.

On Twitter, I’ve engaged in a fascinating conversation about the impact of investors, and the extent to which their marginal additional demand impacts house prices, including with smart people who disagree with me.

I’ve thought a lot about pricing power – but in a slightly different way: the pricing power that isn’t used.

Costco Wholesale Corp (NASDAQ: COST), in the US, is derided by some as ‘the world’s largest co-op’: a criticism that points to the critics’ belief that the company charges too little for its products and should increase prices to boost margins.

And yet, the company, by sticking to its guns – and its business model – has grown its profit from US$5 billion in 2021 to over US$8 billion last year. Not bad for a ‘co-op’!

Contrast that with Woolworths Group Ltd (ASX: WOW) here in Australia, which is adding friction and annoyance to members of its ‘Delivery Unlimited’ program by adding a $2 surcharge to deliveries made on Sundays and Public Holidays.

Justified? Sure, financially, based on the company’s higher costs. But it doesn’t charge more for groceries on Sundays, so this feels jarring.

In either event, I’m sure the reported financials will look a little better after the surcharge is added. And that’ll look like a win.

But in the long term? Let’s just say that if I was looking to maximise long term shareholder value (the job of every CEO and Director), I wouldn’t be poking customers who are paying to increase their own loyalty (if you’re paying a subscription for free delivery, you’re not likely to buy your groceries somewhere else).

And that might be the best example of what’s been on my mind most over the past few weeks: the trade-offs between the short- and long-term.

Whether it’s housing policy (or politics in general)…

Whether it’s profit maximisation…

Whether it’s the lure of predictions…

Whether it’s trying to grow our portfolios…

… the short term is just so incredibly seductive.

We get to see results more quickly.

There’s less uncertainty.

It feels like we have more control.

And yet, the real rewards come over time.

I mentioned Costco’s impressive recent results.

What’s more impressive is that the US$8b the company earned last year is eight times the earnings of 20 years earlier.

And the share price? It closed 2005 at around US$50 a piece. At the end of last year, it was US$862.

Again, these aren’t new insights for me. And I hope not for you, either.

But as the news cycle picks up, and then we hit ‘earnings season’ in February, I want you to keep the lessons of the last couple of weeks in mind.

When the temptation is to react to the latest news and announcements, I want you to imagine how many pieces of news were written about, and how many announcements were released by, Costco over the last 20 years.

Think about the times when the company’s profits weren’t quite what the market expected.

When the share price fell.

When analysts changed their ’12 month price targets’.

The breathless reporting and the hand-wringing.

The obsession over the latest quarter’s sales growth or this year’s profit margins.

As I think of all that, I can’t help but shake my head and smile, wryly, at the futility of so much of it.

All of that – as Shakespeare famously wrote – sound and fury, signifying nothing.

Don’t get me wrong: sales and profits matter. Of course they do.

So does the growth in those metrics.

The price you pay absolutely matters, too.

But the question for investors – proper investors, who know that compounding‘s magic not-so-secret is time – is what those things look like in 5, 10 and 20 years.

Feels hard, right? 20 years… who can wait that long?

Me. And you, I hope.

Because there’s no short cut. There’s no get-rich-quick alternative.

There is only quality. And time.

Can I put it bluntly? I think (almost) everything else is wishful thinking and/or wilful ignorance.

Almost? Sure, someone, somewhere, might be able to make a buck guessing short term share price movements. I can’t exclude that possibility, so I can’t make absolute statements.

But is it likely for them?

Is it likely for you and me?

Not even a little bit.

Luck might take you some of the way. For a time.

For the rest of us, buying quality companies at good prices is the best approach, I reckon.

That, and tuning out the noise.

It worked for Buffett. It worked for Costco (not coincidentally, Buffett’s late business partner Charlie Munger was a long-time director of that company!).

I think it is likely to work for us, too.

Fool on!

The post Space, time and… clarity appeared first on The Motley Fool Australia.

More reading

• The best ASX ETFs to buy in 2026 and hold until at least 2036
• I want to buy Amazon and these 4 US stocks in 2026
• 3 high-quality US stocks that look temptingly cheap today

Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Costco Wholesale. The Motley Fool Australia has positions in and has recommended Woolworths Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.