The Last Straw

. Businesses that enjoy network effects tend to have a much greater capacity to deliver outsized returns. They aren’t especially common, but if you can find them you stand to do extremely well — even if it often feels like you are too late. At its core, a network effect describes a situation where the value of a product or service increases exponentially […]

Strawman member Edgescape kicked off a good conversion on Friday, suggesting Occam’s Razor — the idea that we should favour simplicity over unnecessary complexity — was very much relevant to the field of investing. And clearly, other members agreed. It reminded me of a book by Ben Carlson: A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment […]

Berkshire Hathaway (NYSE:BRK) recently held its 2024 shareholder meeting, or if you prefer, Woodstock for capitalists.  If you’ve ever read much Buffett there wasn’t really any new insights in terms of how he thinks about investing. That’s not a bad thing; it’s Berkshire’s consistency of process that’s helped it deliver the long-term returns it has (about 19.8%pa, on average, over 58 years). […]

It’s remarkable how many sacred cows there are in economics. Concepts that are, for some reason, beyond scrutiny. But dig beneath the surface, and you start to see how absurd many ‘fundamental’ concepts are. Which is a worry when you consider many form the basis of a lot of important policy decisions. Take GDP for example, which measures the total […]

When it comes to business success, growth is often seen as the ultimate goal. Increasing revenues, expanding market share, entering new markets — these are the metrics by which many companies measure their progress. But as renowned strategy expert Michael Porter argues in his influential Harvard Business Review article “What Is Strategy?”, the pursuit of growth can often undermine the […]

According to Vanguard, here’s what the various asset class returns look like since 1991: Kind of what you’d probably expect; the further you move up the ‘risk spectrum’ the better the average returns. Sure, the differences don’t appear huge, but they add up over time. But you know this. It’s no doubt part of the reason you’re here. So this […]

One of the most appealing things about investing, at least in principle, is that instead of working for your money, your money is working for you. But don’t fool yourself; if you’re going to be a stock-picker you’ve got to be prepared to put in the hard yards. Sifting through hundreds (if not thousands) of individual companies, identifying the best candidates, […]

A recent article in the AFR proclaimed “Small caps are ripe for a comeback“, citing the relative underperformance of this space in recent years, and the potential for easier credit conditions later in 2024. It’d certainly be welcomed by those of us that play in this space. As discussed below, the Strawman Index has kept pace with the broader market […]

Negative cash flows usually set off alarm bells for investors, and for good reason. At the end of the day cash is the lifeblood of a business. Still, a closer look at things may just reveal a company that is sensibly investing in its future growth. If you can go beyond the surface-level numbers, and build some confidence in the capital allocation decisions of […]