Buying a (200 FCFA) dollar for (100 FCFA) 50 cents. Learn more about the business economics of the under 50 cents superstars rule. These companies’ stock prices soar far above where they have been when Graham unloaded them.
These “superstars” benefit from some kind of competitive advantage that created monopoly-like economics, allowing them either to charge more or to sell more of their products. In the process, they made a ton more money than their competitors.
If a company’s competitive advantage could be maintained for a long period of time – if it was “durable”- then the underlying value of the business would continue to increase year after year.
Wall Street-via the value investors or speculators, or a combination of both – would at some point in the future acknowledge the increase I the underlying value of the company and push its stock price upward.
Because these businesses had such incredible business economics working in their favor, their was zero chance of them ever going into bankruptcy.