Augustine of Hippo, whose writings influenced the development of Christianity and Western philosophy, wrote in his book, Confessions, about his struggle with doubts and temptations on his conversion to Christianity. He called this the ‘agony of hesitation’.
Investors may well have experienced a different form of the ‘agony of hesitation’ because doubt is a soulmate in a world of chance. Here are a couple of current personal examples.
Moats can never be clearly visible through the smog of capital misallocation. Peer through the haze and one thing is clear — a company such as General Electric (GE) could not have had a distinguished 100-year existence without a significant moat. That heritage includes a formidable foundation of installed industrial equipment spanning areas as diverse as aerospace, power and healthcare, cocooned in a digital ecosystem. The growing service revenue stemming from maintenance, repairs and upgrades led to deep customer relationships, customer captivity and switching costs. The very scale at which GE operates leads to economies of scale and its recent stated commitment to cost control and proposed shedding of assets of $20 billion should, hopefully, translate into a more focused and leaner organisation.
GE has pioneered many technologies in the past. Competitors may have better operating margins on comparable R&D percentage spends, but GE benefits from its ability to use products from new technologies, such as additives, across its business units, giving them a significant competitive edge.