Invest Like the Best with Patrick O'Shaughnessy Modest Proposal – Better, Cheaper, Faster: Why Companies that Reduce Friction Win - [Invest Like the Best, EP.193]
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Sep 29, 2020 Modest Proposal, a well-respected thinker on financial Twitter, dives into investment strategies for today's dynamic market. He discusses the shift towards prioritizing future potential over historical performance. The conversation also highlights how reducing friction can enhance consumer engagement, with examples like Uber and Zillow. Additionally, Modest delves into the evolution of seemingly trivial business ideas and the complexities of navigating online marketplaces. His insights on monopoly dynamics and valuation challenges provide a fresh perspective on investing.
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Underwriting the Future
- Investing now requires underwriting the future, not just the past, due to increasing market efficiency.
- Qualitative insights are crucial for separating high-performing companies, even within value sectors.
Essential Tools for Future-Oriented Investing
- Develop strong business analysis skills, focusing on competitive strategy and analysis.
- Become comfortable with uncertainty and identify businesses that can escape base rates.
Increasing Returns to Scale
- Increasing returns to scale have been a key driver of outperformance in the past 20 years.
- Apply this framework to seemingly silly ideas, considering what happens if they achieve scale.
