If there’s one word that explains the success of Chipotle over
canada goose Steve Jobs Had It Right: Investors Should Keep It Simple Travis Hoium, The Motley Fool Jul. 19 www.outletcanadagoose.biz , 2012, 1:37 PM Flickr/Abode of Chaos”Everything should be made as simple as possible, but not simpler.”– Albert Einstein “Simplicity is the ultimate sophistication.”– Leonardo da Vinci “Less is more.”– Mies Van Der Rohe Some of the great thinkers in history have understood that simplicity is far superior to complexity, and as investors, we should learn that lesson well. Companies that are so complex that we can’t understand them often turn out to be so complex that not even their own managers can understand them. Great investors understand simplicity One of Warren Buffett’s most famous investments has epitomized the “keep it simple” philosophy. Coca-Cola (NYSE: KO) , at its core, is little more than a manufacturer of syrup. Until recently, the company didn’t even bottle most of the products sold on store shelves and still doesn’t in many markets. What’s simpler than a brand name and a formula for syrup? Buffett also owns businesses like railroads, carpeting, and Dairy Queen. He understands simple and invests in successful Canada Goose factory outlet , easy-to-understand businesses. Steve Jobs brought the “keep it simple” philosophy back to Apple (Nasdaq: AAPL) when he returned as CEO, jettisoning products for a product matrix that included four main products. Apple wanted to serve consumers and professionals and needed to offer a desktop and a laptop. Jobs felt that the company didn’t need more than four products for that market and that mantra lives today with the company selling just a handful of products. In restaurants, one of the greatest success stories in recent years follows the same line of simplicity. It doesn’t come much simpler than Chipotle (Nasdaq: CMG) . The company’s menu is short and sweet and so is its pricing, helping make the company operationally efficient. If there’s one word that explains the success of Chipotle over a similar product at Qdoba, it would be “simplicity”. Complexity is the enemy Contrast Apple’s success with Microsoft (Nasdaq: MSFT) , which can’t seem to get a grasp of what it is at its core. Is it an operating system giant, a search engine maker, an ad company, a news organization, a maker of tablets, or something else? It wasn’t always this way for Microsoft. When the company was rising to dominance in the PC market, it primarily made an operating system and a suite of office software. But size has caused Microsoft to go after more markets and investors have been left with a flat-lined stock price. Banking is another business that appears simple on the surface but has been full of complex dangers in recent years. If you read any accounts of what went wrong in the financial crisis, like former Treasury Secretary Henry Paulson’s On The Brink, you can’t help but be amazed at the complex web banks have woven for themselves. JPMorgan’s recent “London Whale” debacle is just the latest example of how banks have become so complex that I avoid investing in them altogether. This complexity has been the downfall of investors over the last five years, but one conservatively run bank in the Midwest has outperformed its more complex rivals. US Bancorp (NYSE: USB) has quietly stuck to the age-old practice of collecting deposits and lending to borrowers, a crazy-simple strategy that appears to be working better than derivatives trading. The Motley FoolIf you don’t understand it, you can’t value it Part of the challenge in investing is valuing companies, something that is only made more difficult by complexity. A fellow Fool tweeted earlier today that Goldman Sachs is trading at a 23% discount to tangible book value, providing upside for investors. But do you trust Goldman’s view of what “tangible book value” actually is? As JPMorgan’s “profit” showed yesterday, banking is a game of shadows, and book values or paper profits mean very little. Apple’s simple, but it also makes a fortune. Get the latest on the iDevice giant in the Fool’s premium report on Apple. Election Shocker: November’s Big Winner Will Be… Since 1952, the S&P 500 has posted a gain in the last seven months of an election year 85.7% of the time. But in order to ensure maximum profits and minimum risk after the election, you need to have the proper investment strategy in place well before November. That’s why we’ve asked our top advisors and equity analysts to weigh in on which investments will win if Romney does… which will win if Obama does… and what you can do to boost your wealth no matter who wins in November. You can access an exclusive bundle of videos, roundtables, special reports, and more from these pros absolutely free for a limited time. Simply enter your e-mail address below and then check your inbox for further details. DON’T MISS: Blogger quits his job to spend an incredible year traveling the world > Read the original article on The Motley Fool. Copyright 2018. Follow The Motley Fool on Twitter. canada goose parka
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