Molson Hart

New from The LT3000 Blog: Dynamic vs. static analysis, and what the US shale and technology sectors have in common Cheers, Lyall https://lt3000.blogspot.com/2020/02/dynamic-vs-static-analysis-and-what-us.html …

Key issue with your argument is that with the “tech” co’s you talk about, ultimately there is likely to be 1-2 players sharing the market after a period of intense competition (cf Meituan and http://Ele.me ). With shale, that’s unlikely to happen.

If I apply reductio ad absurdism to your argument, no business should ever invest in growth, as competitive response will destroy the economics. There are businesses, and then there are businesses. Some will succeed, some will fail. Facebook and google were loss-making too.

And im not talking about companies like Google, which is a fabulous company. Its profits likely fall when the tech downturn happens as online ad spend significant declines, but they will continue to make a tonne of money in absolute terms.

Jamie, you are not correct. It depends on market dynamics. For example, social media is winner take all. It’s 2005, orkut, froendster, MySpace, and Facebook all spend to get users. Instead of all having permanently bad returns, 3 die and 1 gets amazing economics.