The Four Sources of Investment Mistakes

The hardest question for investors is asking how much of their returns come from skill and how much comes from sitting on the right side of a lucky trend. The answer doesn’t always matter. The most important thing is the willingness to ask that question in the first place. Because asking that question helps improve the investment process. And this is how I introduce pieces of psychology into my investment models. It’s how I think about thinking.

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Why We Don’t Fear Inflation

There is wide agreement that consumers are generally hurt by high inflation, but does business really suffer from inflation? (Do rising prices hurt business?) This can be true if inflation is bad enough, but even this effect will be specific to an industry or an individual company. Some manufacturers will get squeezed if their costs go up faster than they can raise prices, but better businesses are able to raise their prices in line with rising costs. Good businesses should be able to raise their prices even faster than rising costs, while the best businesses are in a position to take a cut from transactions and benefit from inflation simply by the default of their existence. Moderate or high inflation is not a serious risk for a high quality company.

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Coronavirus Crash & Recovery: Foresight and Hindsight in 2020

The story of the year—the pandemic—is one that covers every part of life in every part of the world. But our interest is primarily the economic effects and the market impact in the United States. I started following the Coronavirus sometime in January of 2020. My view at the time was that the world should easily get it under control. I hoped, at worst, that it would be another SARS. It was a reasonable expectation that a similar disease outbreak would lead to a similar global health outcome. But one small change has made all the difference.

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The Business Evolution of the Video Game Industry, Part 3: The Future of Gaming

The future of video games will continue to build from the trends of the past. For consoles, this means creating the most attractive video game library. Game libraries are no longer made entirely with a physical shelf full of disks, but instead can simply be an account with a list of games associated with it. Digital downloads are also the future of the games themselves—selling the games through a digital distribution network has become the norm, but selling items inside a game is also a primary strategy that will never go away. No game is ever fully complete; it can be broken into thousands of pieces that are each sold individually, sometimes over many years.

But this main theme—a gaming industry that is more online and more digital—is overshadowed by the flashiest opportunity in the future of gaming: eSports.

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The Business Evolution of the Video Game Industry, Part 2: Software

The story of third-party developers is complicated and constantly evolving. Thousands of developers have been formed, bought out, shut down, and re-formed again. And only four major independent game publishers/developers still exist today (in order of size: Activision Blizzard, Electronic Arts, Take-Two Interactive, and Ubisoft).

This is how they do business.

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The Business Evolution of the Video Game Industry, Part 1: Hardware

The introduction of each new group of consoles is divided into different generations on the basis of what technology they use and when they were introduced. Each new generation was a race to reach the best combination of price, game library, console features, and timing. Getting any of those factors wrong meant that the company would struggle, but the most important was the game library. Missing on the game library could mean failing out of the industry, but getting it right could lead to success that extends to multiple generations.

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A Timelapse of the Tech Sector, Part 2: After the Internet

After the Internet, changes in technology were primarily digital. While computers kept getting smaller, the main focus became how these computers connect with each other. Technology became more connected, more mobile, and more interactive. The physical components of a computer still had a place in the market, but they were overshadowed by the exponential growth in data; the most valuable technology was used for collecting data, analyzing data, and using data. The emergence of technology “platforms” defines this new world.

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A Timelapse of the Tech Sector, Part 1: Before the Internet

Before the Internet, changes in technology were primarily physical. As time passed, computing devices became smaller, cheaper, and easier to use. A summary of the different computer categories describes this change: from mainframe, to minicomputer, to microcomputer (personal computer), to “pocket computer” (and mobile phone). The company that forced the move to the next market was almost always a startup, but the previous market leaders were not always left behind; their influence on the research for these new markets helped to set the standard.

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