The Intellectual
Investor’s
Lexicon
By Vitaliy Katsenelson
S
Share Buybacks (distortion)
Despite Apple’s earnings rising from $37 billion to $57 billion, its book value declined from $123 billion to $78 billion. For every share repurchased at $50 with book value of $1, you automatically create negative $49 in book value ‘destruction.’ So it’s completely meaningless.
Sustainable Competitive Advantages (Moat)
A deep moat around its business often created by strong brands, high barriers to entry, patent protection etc — allowing a company to have a leg up against competitive threats.
Switching Costs
Most important, there are no switching costs for consumers.
