Winners Keep Winning — The Persistence of First-Class Business Models
September 12, 2023
6 min read
Winners Keep Winning — The Persistence of First-Class Business Models
The philosophy is simple: winners possess the remarkable ability to maintain their winning streak and often exceed the most optimistic expectations. The reason? Profitability is persistent. A deepening of «Good Story & Good Chart» with half-year observations from market internals. Our original analysis for The Market by NZZ plus the extended investor's view.
In 30 seconds — the core thesis
- Winners keep winning — because profitability is persistent. First-class business models have structural advantages that hold or strengthen their competitive position over years. That's the operational basis for long-term compound effect.
- Half-year reporting season delivers market-internal signals. After every season the market gives clear hints which «Good Stories» show operational strength and which weaken. Disciplined investors read these signals systematically — they are the practical tool for quality confirmation.
- A «Good Story» has already won. It has captured market shares, built a moat, demonstrated profitability consistency. Disciplined selection doesn't search for «future winners», but for «existing winners that continue to win». The difference is substantial and significantly reduces selection risk.
The original analysis — the opening
I wrote a month ago at this place my first article for The Market about our investment philosophy: «Good Story & Good Chart».
Now the half-year reporting season is over, and the best economist I know — namely the inside of the stock market — gives me some hints.
What are they?
The valuation downturn is over, and quality stocks are starting to decouple from the indices since the summer. I'm now looking for first-class business models, the «Good Stories», that show signs of strength.
But what is the prerequisite for that, or in other words: what belongs to the foundation of a «Good Story»?
As a reminder: A «Good Story» has already won.
As Albert Einstein put it: «In theory, theory and practice are one and the same. In practice, they are not». For this reason, I'd like to list below examples of companies we like to invest in.
→ Read the full article with concrete business examples on The Market by NZZ
Chart 1: Fortune 100 — Best Companies to Work For
Source: NZZ The Market
01The uncomfortable question: why do most investors search for «future winners» instead of «existing» ones?
Investor culture is disproportionately oriented towards discovery — the next Tesla, the next Amazon, the next Nvidia. But structurally, most profitable investment decisions are different: in businesses that have already won and continue to win. This uncomfortable question doesn't fit into an NZZ column with the necessary depth — but it's the key to understanding: The statistical probability of identifying a «future winner» is significantly lower than the probability of correctly assessing an «existing winner».
Three structural mechanisms explain the investor bias toward discovery instead of confirmation:
- Narrative attractiveness of the «discovery» pattern. Stories about early Apple investors or Amazon shareholders are narratively exciting — stories about disciplined 20-year holders of Procter & Gamble are boring. Media investor culture cultivates the discovery pattern because it delivers better stories. Disciplined investors consciously ignore this narrative distortion.
- Asymmetry between survivorship and failure. We see the Apple story, but not the thousands of 1980s tech startups that failed. This survivorship bias dramatically distorts the perceived hit rate of «discovery» strategies upward. The statistical reality: most «future winners» bets lose.
- Confirmation is mistaken for conservatism. «Buying existing winners» sounds unexciting, almost cowardly. Actually, it's statistically the more rational strategy — it uses already demonstrated operational strength, instead of betting on hypothetical future strength. That's not conservatism, that's probability optimisation.
What profitability persistence research shows
Academic studies (Fama-French, AQR Quality Factor Research) empirically confirm: businesses with historically high capital returns retain this property structurally more stable than statistical mean reversion would suggest. In other words: quality remains quality, often over 10-20 years. This «quality persistence factor» is one of the most robust documented market anomalies — and exactly the operational basis of the «winners keep winning» thesis.
02The three structural drivers of winner persistence
Why do winners actually keep winning? Three structural mechanisms explain persistence:
The three drivers of quality persistence
Moat stability
Competitive advantages (scale, network, switching costs, brand) typically decay over 10-30 years — very rarely they collapse abruptly. This structural inertia extends the winner position.
Reinvestment compound
High profitability delivers cash for reinvestment in the competitive advantage — which strengthens the moat and maintains profitability. Self-reinforcing loop that makes persistence mathematically dominant.
Talent magnetism
Best talents work for best businesses. Better talents further strengthen the competitive advantage, which again attracts better talents. The Fortune-100-Best-Employers list is not coincidentally highly correlated with long-term stock performance.
These three drivers act simultaneously and multiplicatively. A business that structurally meets all three criteria has a substantially higher probability of still being a winner in 10 years than a discovery candidate without these demonstrated advantages. This probability difference is the statistical basis of disciplined quality selection.
When do winners lose their status?
Persistence isn't eternal. Three triggers typically end the winner position: (1) disruption shock — a technological or regulatory change makes the business model obsolete (cf. Kodak companion). (2) management failure — skin-in-the-game dwindles, capital allocation becomes sub-optimal, RoIC falls. (3) valuation shock — extreme valuation overshoot leads to multi-year valuation compression even with intact business. Disciplined investors monitor all three triggers and combine the persistence thesis with active sell discipline (cf. 12-sell-rules companion).
03What fundamentally makes a «Good Story»
What belongs to the foundation of a «Good Story» is the operational answer to the persistence question. Four concrete building blocks:
1Demonstrated profitability consistency
At least 5-10 years continuously above-average capital returns (RoIC, ROE, ROA above sector average). Consistency more important than a single peak year. Shows structural quality, not cyclical luck.
2Stable or growing market shares
Over 5+ years market-share trend upward or at least stable — with growing total market. Market-share loss is often the first warning signal of an eroding moat (cf. tennis-balls companion).
3Disciplined capital allocation
Management with skin in the game allocating capital internally (R&D, capex), externally (M&A) or via payout (dividend, buyback) based on RoIC optimisation — not on growth hype. Visible over multiple capital-allocation cycles.
4Talent magnetism and culture
Visible in Fortune Best-Employers lists, low employee turnover, high Glassdoor rating. Operational indicator for the «soft» quality dimensions that long-term carry the competitive advantage.
Businesses that meet all four criteria are the «Good Stories» disciplined investors search for. They aren't spectacular in media coverage. But they are structurally significantly more likely to still be winners in 10-20 years.
04What this means for your quality portfolio
Three strategic implications of the winner-persistence thesis:
| Implication | What to do |
|---|---|
| 1. Selection on «existing winners» instead of «future» | Concentrate selection energy on businesses with demonstrated quality track record. Limit discovery energy to 5-10% of portfolio. This asymmetry follows statistical reality — existing winners have higher probability of continuing to win. |
| 2. Read half-year reports as persistence confirmation | After every reporting season: check for each position whether operational quality metrics remain intact. This systematic reading of «market internals» is the operational translation of the persistence thesis into portfolio practice. |
| 3. Hold winners, instead of selling too early | The most common investor trap: selling winners too early «because they've risen enough». If quality fundamentals are intact and valuation is reasonable, winners should be held — the persistence mathematics continues to work in favour of the investor (cf. paradox companion: buy high, sell higher). |
The investment philosophy «Good Story & Good Chart» that underlies this article is explained in detail in the Flagship companion. The counter-intuitive holding discipline is treated by the Great-Paradox companion. The sell discipline against selling winners too early is deepened in the 12-sell-rules companion.
05Three scenarios — how the winner-persistence strategy performs
Bull Case
Disciplinedly selected winners deliver structural outperformance
Over 20-30 years, concentration on 25-35 quality winners with all four foundation criteria delivers structurally superior returns — typically 1-3 percentage points annually vs. broad index. Over 30 years that sums to significant absolute return differences. Statistically the most likely path with disciplined implementation.
Base Case
Selective winner persistence with occasional disruption shocks
15-20% of original winners lose their position over 10-15 years through disruption or management failure. The remaining 80-85% deliver continued strong persistence. Investors must timely sell disruption losers (sell discipline) and hold persistence winners. Realistic base case.
Bear Case
Accelerated disruption wave breaks persistence patterns
AI, regulatory intervention, geopolitical shifts break the persistence of many historical winners faster than historically typical. Then the persistence strategy is less reliable — investors must respond more aggressively to disruption triggers. Possible, but statistically the less likely path.
06What you should review now
A winner-persistence inventory of your portfolio takes 60-90 minutes at 25-30 positions. Four concrete checks:
1. Quality-foundation classification for each position. Does each position meet all four foundation criteria (profitability consistency, market-share trend, capital allocation, talent magnetism)? Positions with <3 met criteria aren't «Good Stories» in the structural sense.
2. Check discovery-vs-confirmation ratio. What share of your portfolio is in «future winners» (speculative discovery), what in «existing winners» (demonstrated quality)? A healthy ratio is 85-95% existing, 5-15% discovery.
3. Establish half-year report routine. After every reporting season (Q2 and Q4): systematic persistence check of each position. Operational metrics still intact? Market shares still stable/growing? This discipline is the practical translation of the persistence thesis.
4. Winner-sale diagnosis. Have you sold quality winners in the last 24 months because they had «risen enough»? These sales have statistically below-average results. Honest self-diagnosis is the starting point for better holding discipline.
What disciplined investors do
They concentrate their selection energy on confirming existing quality winners, instead of discovering hypothetical future ones. They read every half-year reporting season as a persistence test of their positions. They hold quality winners long-term, instead of selling them on reflex when they've «risen enough». They respond discipline-consistently to disruption triggers when persistence is structurally endangered. This discipline isn't spectacular — it's methodical confirmation work. Over 30 years it builds structurally superior compound returns, because the persistence mathematics systematically works in favour of disciplined quality holders.
07Frequently asked questions
Which concrete businesses does Thierry name in the original article as «Good Stories»?
The original article names concrete businesses that met the persistence criteria at the time of writing (Sept 2023). We don't publish the specific names here because our focus is on the transferable selection methodology. The named businesses at that time are today possibly different — the methodology remains valid.
Isn't «winners keep winning» a survivorship-bias argument?
No — that's an important distinction. Survivorship bias arises when one looks only at historical winners and ignores losers. The quality persistence thesis is empirically supported by academic studies that look at all stocks of a period and find: high-RoIC businesses show statistically persistent RoIC performance. That's statistically documented, not selectively observed.
What's the difference between «winners keep winning» and «buy high, sell higher»?
They complement each other. «Winners keep winning» focuses on operational quality persistence (fundamental). «Buy high, sell higher» (cf. paradox companion) focuses on market valuation dynamics (momentum). Quality persistence + valuation momentum is the structurally strongest combined selection.
How does arvy apply the persistence thesis?
arvy holds the quality foundation as a central selection criterion. Current position distribution and persistence observations you find transparently documented in the arvy Quarterly Report Q1 2026.
Further reading — the thematic anchors of this analysis
Existing winners are statistically the more likely future winners
Investor culture rewards discovery stories — finding the next Tesla, the next Nvidia. Statistical reality is different: existing winners with all four foundation criteria (profitability consistency, market-share stability, capital-allocation discipline, talent magnetism) are the more likely future winners. This insight is intellectually trivial and operationally transformative.
What separates disciplined investors from average ones is not the ability to discover future stars. It's the methodical discipline to systematically confirm existing winners — half-year report by half-year report — and hold them over decades, instead of selling them on reflex when they've «risen enough». This discipline isn't spectacular. It's methodical confirmation work. It delivers over 30 years of compound effect structurally superior returns — not because it's spectacular, but because the persistence mathematics relentlessly works in favour of disciplined holders. Anyone understanding and consistently implementing this builds wealth across generations. Anyone ignoring it and chasing discovery hype loses systematically against persistence statistics. The choice is personal. The mathematics is universal.
Original written by Thierry Borgeat, Co-Founder of arvy, for The Market by NZZ. The extended arvy companion piece reviewed by Patrick Rissi, CFA and Florian Jauch, CFA. Academic references: Fama-French Quality Factor Research, AQR Quality Persistence Studies. Last updated: April 2026.
Disclaimer: This article is for general educational purposes and does not constitute personal investment advice. arvy is a FINMA-supervised asset manager with a CISA licence (Art. 24). Imprint & Legal Notice.
