Greg Mankiw quotes hedgie Mark Sellers instructing Harvard Business School students. Greg focused on the Mark’s comments that clear writing expresses clear thinking (and you’d better be good at clear thinking), but I got a lot more out of the transcript of the speech than that.
Sellers develops the idea of a “moat” as a sustainable competitive advantage and outlines the four economic moats. Anything which can be duplicated (such as technology) is not a moat; it’s a short term advantage. The moats he describes are:
- Economies of scale and scope (WMT, HD)
- The Network Effect (EBAY, MA, AXP)
- Intellectual Property (DIS, NKE,DNA)
- High switching costs (MSFT, PAYX)
He then develops the idea of seven traits of great investors that constitute sustainable sources of advantage. Again, things that can be duplicated easily (such as reading more books or getting an MBA) may be important, but they’re not sustainable sources of advantage. A very interesting speech.