This week’s podcast is about the external view and the importance of base rates. Berkshire-invested Kroger supermarkets is a good example of a company that can really be viewed externally.
Here is my new book:
- Moats and Marathons (Part 1): How to Build and Measure Competitive Advantage in Digital Businesses Kindle Edition
Common metrics for base rates:
- Sales growth
- Gross profitability (gross profits / assets)
- Operating leverage. Change in operating profits relative to change in sales.
- Operating profit margin
- Earnings growth
Here is the McKinsey Power Law for economic profits
Here is the McKinsey book Beyond the Hockey Stick.
Here is the Hairy Back graphic from McKinsey
- What Ant Financial Tells Us About the Future of Square. Plus, Why The External View Is So Hard in Digital. (Jeff’s Asia Tech Class – Podcast 61)
From the Concept Library, concepts for this article are:
- External vs. Internal View
- Regression to the Mean (average / base rates, rate of regression)
From the Company Library, companies for this article are:
I write and speak about digital competition and China / Asia’s leading tech companies.
My book Moats and Marathons details how to measure competitive advantage in digital businesses.
I also run Asia Tech Strategy, a podcast and subscription newsletter on the strategies of China / Asia tech companies.
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Note: This content (articles, podcasts, website info) is not investment advice. The information and opinions from me and any guests may be incorrect. The numbers and information may be wrong. The views expressed may no longer be relevant or accurate. Investing is risky. Do your own research.