The Constant in the Business Environment: Competition for Losers

In 2017, a professor by the name of Hendrik Bessembine said that only 4% of stocks are covered for all the gains in the US stock market. He went back and did the same thing on a global scale: Only 3% of the stocks really account for all the gain. That is a reversion to me. Any business that generates high return on capital will start attracting competition, which will arbitrage away the returns. And while generating that high return is an important factor, that by itself is not enough. The other equally important piece is the ability to reinvest those returns to generate similar or better returns. So I define a high quality business as one that has the ability to