The ideal capital cycle opportunity for us has often been one in which a small number of large players evolve from a situation of excess competition and exert what is euphemistically called “pricing discipline.” Having a small number of players is important, since retaliation (say a price cut) is likely to be a more powerful weapon in the hands of a dominant price setter, although barriers to entry are also required to deter opportunistic entrants from taking advantage of any price umbrella.

Capital Returns: Investing Through the Capital Cycle: A Money Manager’s Reports

“Investors play a different game. They generate superior returns when they correctly anticipate revisions in the market’s expectations for a company’s performance. Investors do not earn high rates of return on the stocks of the best value-creating companies if those stocks are priced to fully reflect that future performance. That is why great companies are not necessarily great stocks. An investor uses competitive strategy analysis as a means to anticipate revisions in expectations.”

Excerpt From: Michael J. Mauboussin. “Expectations Investing.”

“From time to time we saw better economies and worse—slowdown and prosperity, recession and recovery. Markets, too, rose and fell. These fluctuations were attributable to normal economic cycles and to exogenous developments (such as the oil embargo in 1973 and the emerging market crisis in 1998). The Standard & Poor’s 500 had a few down years in the period from 1975 to 1999, but none in which it lost more than 7.5%. On the upside, however, 16 of those 25 years showed returns above 15%, and seven times the annual gain exceeded 30%. Despite the ups and downs, investors profited overall, investing became a national pursuit, and Warren Buffett, one of America’s richest men, got that way by buying common stocks and whole companies. A serious general uptrend was underway, reaching its zenith in 2007.”

Excerpt From: Howard Marks. “Mastering the Market Cycle.”

“Spinoffs can take many forms but the end result is usually the same: A corporation takes a subsidiary, division, or part of its business and separates it from the parent company by creating a new, independent, free-standing company. In most cases, shares of the new “spinoff” company are distributed or sold to the parent company’s existing shareholders. There are plenty of reasons why a company might choose to unload or otherwise separate itself from the fortunes of the business to be spun off. There is really only one reason to pay attention when they do: you can make a pile of money investing in spinoffs. ”

Excerpt From: Joel Greenblatt. “You Can Be a Stock Market Genius.”