“Competitive advantages are characteristics of a business or business model that help keep competitors at bay or drive pricing power.”
"Cumulative Advantage or The Matthew Effect follows the old saying that “the rich get richer, the poor get poorer.”"
"First recognized in Adam Smith’s book Wealth of Nations, specialization theory shows us that workers are far more productive if you break up large jobs into smaller ones and have workers specialize in performing these smaller jobs."
"Mr. Market is an allegory that helps explain daily fluctuations in the markets. Graham asks you to imagine that you’re one of two owners of a business, along with a partner called Mr. Market. The partner frequently offers to sell his share of the business or to buy your share. Graham says this partner is what today would be called manic-depressive, with his estimate of the business’ value going from very pessimistic to wildly optimistic."
“Take the probability of loss times the amount of possible loss from the probability of gain times the amount of possible gain. That is what we’re trying to do. It’s imperfect, but that’s what it’s all about.”—Warren Buffett
“As our shareholders know, we have made a decision to continuously and significantly lower prices for customers year after year as our efficiency and scale make it possible. This is an example of a very important decision that cannot be made in a math-based way.”
"Secular shifts are a change in volume, demand or relevance driven by secular or permanent forces. This is as compared to a cyclical shift or change that is driven by temporary forces like supply and demand. Secular shifts have the power to put entire companies out of business if they are no longer relevant (think Kodak with the advent of digital photography). "
"Hindsight bias is a Cognitive Bias where the human brain tends to see events in the past as more predictable than they actually were at the time. In short, when we think about something that has already happened we tend to believe the outcome was obvious."
"Economically, this is the ability of a nation to produce a good or service at a lower opportunity cost than another, which establishes the basis for international trade. This can be applied to a competitor analysis when establishing the strengths and weaknesses of competitors using a matrix or some other model."
"The law of large numbers states that over a large number of occurrences the average of the values of the occurrences approaches the mean. For example, if you tossed a coin 10 times, you might get 8 heads (80%) and 2 tails (20%); but if you tossed the same coin 1,000 times, the law of large numbers would direct the heads/tails results closer to the average of 50%. Another name for this phenomenon is “gambler’s fallacy.”"
"I call this the Octopus Model where all these lines are the reach of the octopus, building connections with the users. I feel this is one of the many patterns or mental models that as value investors one might want to have."
Essentially, Pareto showed that approximately 80% of the land in Italy was owned by 20% of the population; Pareto developed the principle by observing that 20% of the peapods in his garden contained 80% of the peas. — Wikipedia
"The basic premise of reversion to the mean is that nothing can go on endlessly - whether in a positive or negative direction. Eventually there are factors that act to stop or decelerate growth or decline to some normal or equilibrium level. To put it concisely: Extreme outcomes tend to be followed by more moderate ones."