The jockey or the horse?
While investing, we have always faced one big dilemma. Should we invest with the company in mind or its management? Even Warren Buffett has faced this kind of a dilemma and from his own past mistakes and experience has arrived at the following conclusion.
He says, "Good jockeys will do well on good horses, but not on broken-down nags."
A good management has to have a good business for them to run it profitably and in the process, create value for shareholders. But if a good management handles a business with bad economics, there is very little that even a good management can do.
While there could be exceptions to this rule, more often than not, a bad business will not be set straight even by the best management in the world. A bad management on the other hand can cause temporary harm to a good business, but once the management leaves, the good business can well be restored to its past glory.
Image: Jockey Darren Gauci riding Tesbury Jack easily wins during the Sir John Monash Stakes Day at Caulfield Racecourse in Melbourne. | Photograph: Gabe Palacio/Getty Images Mark Dadswell/Getty Images
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