In the blog "Reflections On Value Investing," Shai Dardashti puts forth a very good point about competitive moats that don't erode. Companies with high returns on equity, on the basis of a solid brand name, don't have their superior ROE eroded if the raw cost difference between the brand name and a cheaper alternative isn't enough to get many consumers switching. Why switch to the generic if it means only a $20 saving per year, unless it's important to you to shop at a discount? Some people do, but many don't. Others consider the risk of lower quality to be not worth saving a few bucks over, even if that risk is largely illusory.
It's a post that well worth reading, and thinking over, particularly if you're an economics graduate.
No one cares more about your money than you do
16 hours ago
The post says it like it is.
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