I can't hear you very well
imdur 60 I have taken a look at how much you could have paid for some of these companies over the 30-year period between 1979 and 2009. In particular, I looked at Coca-Cola and Colgate Palmolive. In 1979 they had about the same rating as the market – 10 times earnings. But what could you have paid for them at that time in terms of p/e and still equalled the performance of the market over the next 30 years? The answer rather surprisingly is about 40 times earnings. Why? Because these companies' total returns grew at about 5pc a year faster than the market over this period, and rather like the earlier illustration of a 2.5pc differential in compound growth, this 5pc differential multiplied the final capital sum represented by their share prices four times faster than the market rose.