Do you want to transform the way you pick stocks? Then look at competitive advantage!

Wednesday: The Independent Investor From the desk of Miles Everson: Happy Wednesday! I hope you’re having a great week so far. Every Wednesday, I talk about various topics about investing. My goal is to help you boost your investment portfolio and improve your financial well-being in the long run. Today, let’s talk about a facet of investing that most investors seem to forget about. Keep reading below to know why competitive advantage is an important quality you should look for when finding stocks to invest in. CEO, MBO Partners Chairman of the Advisory Board, The I Institute

Do you want to transform the way you pick stocks? Then look at competitive advantage! Despite being early to introduce various technological innovations, tools, and products, Samsung is still playing catch-up to Apple. You see, Samsung was the first to introduce wireless charging, the pioneer in letting users run two apps at the same time, and was responsible for bringing USB-C charging to the mainstream. Unfortunately, despite these, Samsung’s returns, measured in Uniform return on assets (ROA), have never surpassed 15%. Apple, on the other hand, has seen its Uniform ROA rise to as high as 159% at one point. The reason for this? Apple just makes it so hard for users to leave its robust ecosystem. The tech giant has more than 2 billion products in circulation today and has spent decades building a seamless ecosystem where it’s very convenient for users to sync their data across multiple devices. For example: The Apple Watch makes it easy to link up with your music library, allows you to read and respond to iMessages, and enables you to sync content between your MacBook and IPad, both of which could act as a second screen. Due to this type of integration, most users simply opt to stay in Apple’s product ecosystem even if it means paying a premium for new products every few years. To sum up, Apple was able to secure its dominant position because it had a competitive advantage in the form of its robust ecosystem. Competitive Advantage Apple’s case is a prime example of a business with a key competitive advantage… a quality that you, as an investor, should look for when picking stocks. Lots of times, investors get caught up in the minutiae, so they end up focusing on why a particular company’s products or widgets are slightly better than its competitors’. In reality, it’s not those things that make a great company. What’s really important is how a firm really makes money. So, as an investor, how can you determine competitive advantage? First, look at all competitors in a particular space and find out what sets a specific company apart. Once you do this, you might find a big firm with better economies of scale or perhaps has intellectual property protections. Once you’re done with this step, focus on finding out how long that specific competitive advantage will last and how strong it is. By simply taking those steps, you’ll significantly boost the speed at which you find opportunities and improve the quality of your stock picks. Remember: Most investors spend their time understanding what a company does. However, that’s not how you get an edge in the markets. If you want to get better returns and find better stocks, spend the bulk of your time analyzing competitive advantage. It’s not what a company does that enables it to dominate, it’s how it makes money. EXCITING NEWS AHEAD The world of work has shifted, and there’s no going back. The barriers to entry have never been lower for talented professionals to work independently, and today’s massive external workforce is hardly a pandemic-produced fad. Business owners can only survive in the new work landscape by partnering with this deep talent pool. With decades of experience in both small-business entrepreneurship and executive management at PwC, I truly believe that the future of work is independent. With that, I’m happy to share with you that my book, co-authored with Walter Scott Lamb, is now available for pre-order on Amazon! Free Birds Revolution: The Future of Work & The Independent Mind This is an essential read for both independent professionals and corporate executives. Here, we provide educational and practical guides to unpack the ever-growing workforce and offer you crucial ways to become a client of choice. Click on the link above to pre-order your copy. Let this book help you future-proof your career and organization in the new world of work. Hope you’ve found this week’s insights interesting and helpful.     Stay tuned for next Wednesday’s The Independent Investor! Did you know that whenever the mainstream media mentions GDP, almost everyone’s ears perk up? Learn more about why the U.S. economic dominance remains secure from China’s reach in next week’s article!