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Well, I've been thinking and, well, see if this makes much sense...
Ever notice how little kids build lemon aid stands across the street
form each other? Usually, it would be more profitable to build anything
but a second lemonaid stand. But if Sally is making some real money, Joey,
an aspiring capitalist, will try to duplicate Sally's success. This is
the lemming factor and we learn it young.
Older lemmings see Intel make some money and try to duplicate that
success. Okay, it's a big market, and now two companies are doing just
fine. So then 500 more lemmings join in and ruin it for everyone.
My theory is that if ROE regularly exceeds 30%, too many competitors
will evolve. After about 2 years of market shake-out, the cycle starts
over. This is why I look for GOOFS that have serious, 2 year downtrends. TBG |
