I first wrote about Deckers Outdoor (NASDAQ:DECK) in February 2004, when the stock was soaring as Ugg boots were really starting to catch on. In that piece, I asked whether Deckers had a sustainable competitive advantage that justified its valuation, or, as Warren Buffett, chairman of Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B), has eloquently phrased it, I tried to evaluate whether Deckers was a company that sold "pet rocks or hula hoops" or one that sold a "Monopoly or Barbie."

I concluded that Uggs were more akin to pet rocks than Barbie dolls, and that their popularity and the company's elevated stock price would both prove ephemeral. Clearly, I was wrong. When I made that call, Ugg sales for the previous year (2003) were $37 million, and the stock price was in the mid-20s; for 2006, sales were $211 million, and the stock is trading near $70 per share today. Those who ignored my advice did very well for themselves.

Why was I wrong? Clearly, my ability to evaluate the sustainability of fashion trends leaves something to be desired. Though I still believe that Buffett's distinction between Barbie dolls and pet rocks is the right one, and I stand by my opinion that Uggs are ultimately more like pet rocks than Barbie dolls, pet rocks can nonetheless remain popular for long periods of time. And during that time, investors can make great returns by going long on pet rocks.

Though I concede that Uggs have remained popular far, far longer than I expected in 2004, I'm still not convinced that there is a replicable, sustainable source of competitive advantage in the business model. As Ryan Fuhrmann recently pointed out, the company hasn't been able to drive growth in its other brands -- Teva and Simple. Sales excluding Uggs were $84 million in 2003 and $93 million in 2006 -- a compound annual growth rate of only 3.5%.

This success story is clearly about one thing: Uggs' continued popularity. I missed that by a mile when I said that Uggs had peaked in 2003, and management deserves tremendous credit for building and sustaining that brand. But whether the management team can now parlay this victory into a long-term track record of success with a broad portfolio of brands when (or should I say if) the popularity of Uggs ultimately fades remains to be seen.

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Fool contributor Salim Haji lives in Denver, Colo. He owns shares of Berkshire Hathaway, but has no other long or short position in any other companies mentioned.