$Taiwan Semiconductor Manufacturing(TSM)$ I was thinking back to a discussion we had about using dividends as income, and I compared it to how Warren Buffett capitalized on Coca Cola, bought in the 1970s and still holds. I think the bigger picture was missed there.
My view is that chips are the new oil. Technology doesn't advance without them. Building a fab company takes around 10 years, and it's extremely hard for any startup to start from scratch. So I still see TSM as a growth company rather than a value company, and competition isn't an immediate concern.
Here's how I look at the numbers: let's assume the stock doubles in 3 years, then 4 years after that, then 6 years after that, and after that it becomes a conventional value company with a lower multiple like the market average, doubling every 7 to 8 years.
So my 20,000 shares — TSM is one of 3 stocks where I have a major position — would become about 125 million in 20 years. Sure, 1% of that won't keep up with inflation, but the principle growth of the company itself gets overlooked. If the stock only grows 5% after that, plus the 1% dividend, that's plenty of security for my family and its generations. That's why Buffett never sells Coca Cola, which is the most boring company, only growing 5% per year for 20 years. He's not an idiot. He makes 5 billion on the dividends and keeps the principle, which keeps up with inflation.
One more thing: this money is in a family trust, so due to Step Up Basis, my family will inherit a lot of it with no taxes, avoiding millions to the government.
Wishing you good fortune.
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