Money management: Is it a profession or a business?

Any great business has some or the other kind of sustainable competitive advantage that allows the business to earn return on invested capital that is above the industry average. One of the so called entry barriers is the initial amount required to start the business. If the amount is quite high, not everyone can enter the industry and the incumbents have a good run. The question is should the government/regulator impose such high capital requirements and dissuade passionate and highly bright individuals from the entering the industry? One of the questions going around in the Indian Mutual Fund industry is whether the minimum net worth required to set up an AMC (currently INR 100 million) should be increased or stay at current levels.

Renowned value investor Mr. Parag Parikh has written a fantastic article articulating his thoughts on the same. You can view the article here

The decline of BlackBerry

The abrupt decline of BlackBerry is an example of how consumers and investors taste changes these days for technology products. If these companies miss a trend, the market doesn't even give time to breathe. Four years ago BlackBerry had 51% of the North American smartphone market which currently is 3.4%. Hope BlackBerry doesn't go down the history aisle as a Palm or a Gateway. Kodak met with the same fate as well when its executives failed to recognize the onset of digital photography. 

Instead think of businesses such as Coca Cola, Nestle, IKEA, Nike, Walmart, Costco, McDonald's etc.  where there is no technological obsolescence. These companies are doing exactly the same thing today what they were doing 50 years ago. The predictability of such businesses is extremely high. How could we have known 10 years ago that Google in 2013 will have its operating system or will be in the smartphone business? Who knows what Apple will be in 2023? Is Tesla valuation sustainable? Tesla stock is up 392% year on year. Tesla's profit history is very poor. 

This is one of the main reasons why great investors hardly touch technology based companies.