You Can Only Sell It Once

I heard the phrase "you can only sell it once" from an astute real estate investor. I did not see this wisdom as applicable to the stock market because Mr. Market offers pricing everyday on every security. However, since that time, I have come to see it as partially applicable.

Most businesses are simply businesses. With an adequate amount of capital, these businesses could be replicated. Yet there are some businesses where no amount of capital can replace them. These businesses could be termed "irreplaceables" or franchises. My real estate friend's outlook is applicable to these companies because such franchises accrue value at a return on capital higher than the growth rate of their environment. "Buy, don't sell" could be the subtitle on these companies.

Examples from the past were brands like Coca-Cola or Hershey's. In today's world, the creativity and changing tastes of millennials has made these brands less irreplaceable. More of these irreplaceables are now in the tech world. The sheer scale of  Mastercard's reach or Facebook's address book makes them franchises. More importantly for the appropriate sale of such companies is the identification of a movement to being a replaceable from being an irreplaceable, as occurred to the Washington Post on the advent of the internet.