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It must be noted that your Chairman – always a quick study – required only 20 years to recognize how important it was to buy good businesses. In the interim, I searched for “bargains” – and had the misfortune to find some. My punishment was an education in the economics of short line farm implement manufacturers, third place department stores, and New England textile manufacturers – Warren Buffett, 1987 Letter To Shareholders

In recent weeks I’ve been expounding the “perennial philosophy” of buying high-quality companies and holding them for the long term. But many of us are tempted by “bargains” – stocks that look cheap but are in fact value traps.

Lyft (LYFT) is a perfect example. I’m sure there are a number of investors out there who view LYFT’s second consecutive quarterly blowup as a buying opportunity. “Look how cheap it is!” “It will come back!” they tell themselves.

But the truth is that LYFT is a second-rate business in permanent decline. It will never beat UBER – or even be a viable competitor.

Learning to avoid low-quality value traps and buy high-quality leaders is a lesson all successful investors must learn – many of us the hard way. I’m just trying to save you time.

Also see: “Dead-LYFT And The Perils of 2nd Rate Companies”.

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