Economic and market cycles (boom and bust cycles) are two interconnected economic concepts. Economic cycles relate to the fluctuations between periods of expansion and contraction within the economy, whereas market cycles refer to the fluctuations in financial markets. Although they are often intertwined and market cycles can be influenced by economic cycles, they can also… Continue reading
My unconventional take on using TAMs. In previous discussions, we’ve touched on the concept of the Total Addressable Market (TAM), its significance, and its application in valuation. I believe it’s important to delve deeper into this topic as the TAM is becoming increasingly crucial for investors. The global landscape is changing, with trade barriers diminishing… Continue reading
Industry Profit Pools can be defined as the collective profits accrued at every stage along the value chain within an industry. Profit pools differ from profit margins, which focus on individual companies. Profit pools simply indicate where the real money flows within an industry. The concept was first introduced by Orit Gadiesh and James Gilbert,… Continue reading
Firstly, I don’t know if Artificial Intelligence is a giant bubble waiting to 💥. The world of Artificial Intelligence is evolving rapidly, with significant growth seen in companies like Nvidia and other tech giants in the AI industry. This has led to concerns about the possibility of a market bubble forming. The AI industry’s expansion… Continue reading
Strategic inflection points are a critical stage in the life of a company, industry, or personal life where a significant change in the competitive environment requires a fundamental change in business strategy. It is a turning point that can lead to either a new era of growth or the beginning of decline. Much like standing at… Continue reading
Porter’s Five Forces is a business strategy framework developed by Michael E. Porter, a Harvard Business School professor. It is a valuable model for understanding the competitive landscape within an industry. It can also help to discover the big wide MOAT that surrounds and protects the castle. TABLE OF CONTENTS: What is Porter’s Five Forces?… Continue reading
Less than 5% of companies drive all market returns. Understanding the fact that less than 5% of companies are responsible for all returns above bonds is crucial for investors. Research by Hendrik Bessembinder reveals that 58% of stocks fail to outperform bonds, 38% beat bonds modestly, and just over 4% of stocks drive overall market… Continue reading
What is the Stock Market? It may seem unusual explaining the existence of the stock market. The intention is to outline the basics of the stock exchange to remind investors why they are participating. Wikipedia summarizes it well. “The purpose of a stock exchange is to facilitate the exchange of securities between buyers and sellers,… Continue reading
Why would you go there…? I want to emphasize the importance of capitalism and free markets in the context of investing. Regardless of your stance on these ideas, it’s crucial to understand their role in underpinning the concept of investing in the stock market. If you disagree with these concepts, I encourage you to consider… Continue reading
What is Common Size Analysis? Common Size analysis is an accounting method used to measure each line item on the financial statements as a percentage of a base or common figure. For example, Revenue is often used as the base figure on the income statement. This means that all the line items such as cost… Continue reading
