#20 The Data Scientist
Behind the Balance Sheet
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The Capital Cycle and the Business Cycle
The capital cycle is central to every sector. It's the fundamental way the world works. I think there's very few things we've found about the real world that's axiomatically true. The basic idea is just competition. When an industry has too much money going to it, then people over invest to chase market share. But that obviously crushes future profits. So when future profits go down, the return on invested capital goes down so the money has to go somewhere else in search of profits. To us, a lot of that is earnings for the next quarter. That's playing the game.
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