Research for "The Myth of Capitalism" revealed that top investors frequently own dominant companies in industries with few players. This suggests that seeking out businesses with strong market positions, often due to a lack of intense competition, is a proven strategy for long-term portfolio growth and stability.
During COVID, the market priced Booking.com as if travel would never recover. The investment thesis was based on historical precedent (e.g., SARS) showing that travel disruptions are typically brief. This counter-consensus view on the duration of the downturn led to a highly profitable investment.
A key part of the Booking.com thesis was that Google would not truly enter the travel booking business. Google prefers earning advertising revenue and avoids the operational complexities of being a "merchant of record," running customer service, and dealing directly with a fragmented hotel market.
The threat of AI disintermediating platforms like Booking.com is mitigated by immense operational complexity. AI firms are unlikely to want to manage global payment systems, customer service for bad travel experiences, and fragmented supplier relationships, just as Google previously avoided these challenges.
The central thesis of "The Myth of Capitalism" is that historically high corporate profit margins stem from increased industrial concentration. This concentration, which grants significant pricing power, is a result of a multi-decade policy pendulum swing away from aggressive antitrust enforcement that began in the 1980s.
History shows the ultimate beneficiaries of technological waves are often not the initial darlings. Facebook and Google became internet giants long after the dot-com bubble. This suggests investors should be wary of paying high valuations for today's hyped AI companies, as the true long-term winners may not even exist yet.
Instead of betting on unknowable AI winners, a better strategy is to find quality companies the market has written off as "losers" due to AI fears. Similar to the unloved "old economy" stocks during the dot-com bubble, these perceived victims could offer significant upside if the disruption threat is overblown.
Living in the Bahamas, away from major financial centers, provides intellectual insulation that helps ensure investment research is driven by internal work rather than prevailing market narratives. This follows the path of investors like Sir John Templeton, who used distance to avoid groupthink and market noise.
The required length of a subscription reveals a company's market power. Bloomberg's two-year lock-in demonstrates immense power, whereas the monthly terms offered by most AI models signal a lack of pricing power and potential commoditization. This simple metric can tell you everything you need to know about their moat.
Author Jonathan Tepper wrote his memoir years ago but published it recently. Revisiting the manuscript after two decades, now as a father, allowed him to bring a new maturity to the editing process. This shows that time and life experience can be crucial ingredients for deepening creative work, even when the core story remains unchanged.