As against the widely touted long-run, expected real returns from equities of 6.5%, we show that the true expectation for global stocks is in the range of 4.5 to 5%.
Three subtle biases in the way investors view historical equity returns lead to inappropriately high equity allocations.
A rational assessment of the capital markets shows that much of the recent market decline was due to liquidation-driven selling. Indeed, prospective returns from quality business have greatly improved.
It has been nearly 20 years since the tech bubble reached its peak. We see an investment pricing behavior similar to the tech boom. Then it was tech versus non-tech. Now, it is high growth versus everything else. As a new dementia takes over, we position differently.
We discuss a very limited form of moat – one driven by a low-cost advantage that is not a result of scale of operations.
We discuss network effects as a source of a sustainable competitive advantage and discuss our analytical framework for analyzing such moats.
In one of the earlier articles in our series, we identified six distinct sources of competitive advantages. This is the fifth article in the series and focuses on mission critical products and services as the source of a sustainable competitive advantage.