Bruce C. Greenwald > Quotes

“Operational effectiveness can be the single most important factor in the success, or indeed in the survival, of any business.”
― Bruce C.N. Greenwald, Competition Demystified: A Radically Simplified Approach to Business Strategy

“value investors prefer to estimate the intrinsic value of a company by looking first at the assets and then at the current earnings power of a company. Only in exceptional cases are they willing to factor in the value of potential growth.”
― Bruce C.N. Greenwald, Value Investing: From Graham to Buffett and Beyond

“sustainable,”
― Bruce C.N. Greenwald, Value Investing: From Graham to Buffett and Beyond

“Without the protection of barriers to entry, the only option a company has is to run itself as efficiently and effectively as possible.”
― Bruce C. Greenwald, Competition Demystified: A Radically Simplified Approach to Business Strategy

“There are a few things I dismiss and a few I believe in thoroughly. The former include economic forecasts, which I think don’t add value, and the list of the latter starts with cycles and the need to prepare for them.
“Hey, ” you might say, “that’s contradictory. The best way to prepare for cycles is to predict them, and you just said it can’t be done.” That's absolutely true, but in my opinion by no means debilitating. All of investing consists of dealing with the future [...] and the future is something we can’t know much about. But the limits on our foreknowledge needn't doom us to failure as long as we acknowledge them and act accordingly.
In my opinion, the key to dealing with the future lies in knowing where you are, even if you can’t know precisely where you're going. Knowing where you are in a cycle and what that implies for the future is different from predicting the timing, extent and shape of the cyclical move.”
― Bruce C.N. Greenwald

“keep in mind Einstein’s admonition that “Everything should be made as simple as possible, but not simpler.”
― Bruce Greenwald, Competition Demystified: A Radically Simplified Approach to Business Strategy

“We put all the assets required at about 15 percent of sales. Spontaneous liabilities (meaning accounts payable, accrued wages and taxes, and other non-interest-bearing obligations) finance a third of the assets.* That leaves capital requirements at around 10 percent of sales. With operating margins at 12–13 percent, the pretax return on capital amounts to 120–130 percent. Even if the investments requirements were twice our estimate, the pretax return on capital would be 60 percent or more. Given the steadiness of the revenues, the networks could easily finance their operations with half debt, half equity. The debt would provide a tax shield to keep the after-tax return on equity capital in the stratosphere. TABLE 10.2
Estimated balance”
― Bruce C. Greenwald, Competition Demystified: A Radically Simplified Approach to Business Strategy

“If no forces interfere with the process of entry by competitors, profitability will be driven to levels at which efficient firms earn no more than a “normal” return on their invested capital. It is barriers to entry, not differentiation by itself, that creates strategic opportunities.”
― Bruce Greenwald, Competition Demystified: A Radically Simplified Approach to Business Strategy

“As any family with children knows, it is far easier to buy kittens and puppies than to drown them later. In”
― Bruce C.N. Greenwald, Competition Demystified: A Radically Simplified Approach to Business Strategy

“Those that use only fundamental variables refer only to a company's business performance, not the relationship between that performance and its share price. Studies have sorted stocks using returns on equity or on total capital invested, growth in earnings per share, growth in assets—as opposed to sales growth—and various measures of profit margins. Companies with high marks on these variables are successful firms whose shares are inherently attractive to investors. However, consistent with the studies we discussed above, it is often the firms that ranked lowest on these measures—low returns on capital or narrow profit margins—that have tended to generate the highest future market returns.”
― Bruce C. Greenwald, Value Investing: From Graham to Buffett and Beyond