Peter Thiel, no doubt, wears many hats.
He's an entrepreneur, startups investor, hedge fund manager, and astute businessman who co-founded Paypal -- on top of that, he's author of the famous book Zero to One: Notes on Startups or How to Build the Future.
Speaking with Wired magazine Thiel said that "uniqueness", "secrets", and a monopoly on the marketplace were the key to successful startups.
Placing importance on the singularity of top-notch business ventures, Thiel explained that, "all happy companies are different, and all unhappy companies are alike in that they fail to escape the sameness that is competition."
According to Thiel, "every moment in the history of business and the history of technology happens only once." Breakthrough "zero to one" companies such as Google and Facebook have nailed this approach, as their succes means they're "not in direct competition with other companies".
Essentially, they have a monopoly on the market, and their value as franchises stem from their possession of a product that is unique and non-existent in other parts of the world.
In a ‘dynamic’ world, evolution of both demand (i.e. customer behaviour) as well as the supply of a product or service can also disrupt some monopolies overnight, the way firms like Kodak and Xerox got disrupted.
Therefore, a creative monopolist reinvests the monopoly profits to innovate new products, improve existing products and figure out better ways of meeting the customer’s demand. Hence, progress usually comes from monopolies, and not from ‘perfect competition’.
Having known the main ways and means of finding monopoly stocks,
You may find many of such companies around you. But one must review their performance over the past and future potential before choosing for investment
- These are companies that dominated their presence in their respective domain
- These are companies that grew in size, stayed up to date with technology.
- They had a better business model, crushed the competition,
- They run their business model with discipline and focus.
- They also had great people as leaders that kept them on track or got them back on track when they strayed.
- These were market leading stocks for decades.
Such companies generate profits continuously and consistently. This helps their stocks to be expensive but also these stocks provide higher returns.
Is it a less risk strategy to invest in such stocks?
You decide.
DISCLAIMER : THIS BLOG IS FOR INFORMATION AND NOT TO SOLICIT ANY BUSINESS. PAST PERFORMANCE IS NOT AN INDICATION OF THE PERFORMANCE OF STOCK IN FUTURE. EQUITY STOCK INVESTING IS A WITH RISK INVESTING INCLUDING RISK ON CAPITAL INVESTED. PLEASE TAKE AN INFORMED DECISION BEFORE INVESTING IN A EQUITY STOCK
