Companies can leverage their dominance based on a durable competitive advantage and best-in-class operational efficiency to push weaker competitors out of the market and gain further market share. All in repeat mode. The result? A flywheel effect leading to perpetual growth machines.
Life is unfair. That is a given.
But amidst the inequities of life, there is one lesson I have learned from difficult times that has remained with me to weather all upheaval: when you find the right thing to do and when you find the right people to work with, invest deeply. Sticking with it for decades is how you make the big returns in your relationships and with your money. All returns in life, whether in wealth, relationships, or knowledge, come from compound interest.
By accepting the reality of life’s unfairness and understanding the power of long-term compound interest, I use these insights to my advantage when making investment decisions. As a passionate bottom-up stock picker, I love looking for companies that play these long-term games while engaging in an unfair fight.
Unfair not for the company I want to own, but for its competitors.
Chart 1: The rise of market concentration by market leaders
