The Bartender Test for Stock Selection

If you had invested 1 $ with Tom Murphy as he became CEO of Capital Cities in 1966, that 1 $ would have been worth $204 by 1995, a remarkable 20% compounded return.

A bartender at one of the management retreats made a handsome return by buying Capital Cities stock in the 1970s.

When an executive later asked why he had made the investment, the bartender replied, “I’ve worked at a lot of corporate events over the years, but Capital Cities was the only company where you couldn’t tell who the bosses were.”

-from the Book ‘The Outsiders-Eight Unconventional CEOs’

One reply on “The Bartender Test for Stock Selection”

The Outsiders is a fantastic book on understanding management and how capital allocation skills separates the best managers from the average.

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