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1/ The new Howard Marks memo contains this reference: http://mastersinvest.com/newblog/2020/11/11/learning-from-the-santa-fe-institute
"Applying the mental model of ‘mean reversion’ for a ‘fade-defying’ business model will lead to an erroneous conclusion. If the mental models are wrong, the spreadsheet model will be wrong. Period."
"Applying the mental model of ‘mean reversion’ for a ‘fade-defying’ business model will lead to an erroneous conclusion. If the mental models are wrong, the spreadsheet model will be wrong. Period."
2/ "The onslaught of startups with readily available capital and minimal barriers to scaling means that the durability of legacy businesses has never been more vulnerable or uncertain.' Howard Marks in today's memo.
"Fight the Fade." #SanteFeInstitute http://mastersinvest.com/newblog/2020/11/15/fight-the-fade-round-2
"Fight the Fade." #SanteFeInstitute http://mastersinvest.com/newblog/2020/11/15/fight-the-fade-round-2
3/ “Competitive advantage period (CAP) is how long returns above the cost of capital will be earned. CAP is similar in concept to 'fade rate.'”
Michael Mauboussin, Chair of the Santa Fe Institute's Board of Trustees http://people.stern.nyu.edu/adamodar/pdfiles/eqnotes/cap.pdf
Michael Mauboussin, Chair of the Santa Fe Institute's Board of Trustees http://people.stern.nyu.edu/adamodar/pdfiles/eqnotes/cap.pdf
4/ Tren: "Returns drop to opportunity cost to capital faster than ever. Gravity's more powerful than ever. In order to defy gravity, bet on those situations where you have a circle of confidence and a chance to really smack an out of the park home run." https://www.infiniteloopspodcast.com/tren-griffin-escaping-gravity-ep26/
5/ I have used a PE ratio in valuing a business exactly never. That's what Mark's is saying too. Do a DCF but focus on the assumptions- terminal value and pricing power - what creates pricing power best is the ability to differentiate and create scarcity (eg, increasing returns).
