What did Aristotle Onassis mean when he said...

> "The secret of business is to know
> something that nobody else knows." -
> Aristotle Onassis What do you think he
> meant?

I think this quote is essentially about market efficiency and competition.

It all comes down to the fact that you're not the only person in the world trying to make a profit. Thus if you know something that leads to a profit but others know it too, it will likely result in a more efficient market, greater competition, and lower profits.

So let's consider a ficticious example.

Let's suppose that you know that Yoyo's are going to make a come-back in popularity. Armed with this knowledge, you set up a business selling Yoyo's to profit from this knowledge.

If nobody else knows it, and you're correct, you'll probably make a fair bit of money. If everybody knows it, and it's correct, you'll probably make less because the market will be flooded with people trying to sell Yoyo's.

I think this is a pretty important principle when it comes to business. It also applies to investing, of course.

For those of you that don't know, I am part of the investment team of an Australian funds management group called PM Capital. I've linked to a recent article about us below in case anybody in interested.

When I look at stocks, one question I always ask myself is what do I see in this stock that the market doesn't? In other words, what value am I adding?

Perhaps I think I have a better insight because I've done more thorough groundwork research that others have overlooked. Perhaps the market is focused on short-term factors that don't have a great effect on the long-term outlook of the business. It could be a range of factors.

If I can't answer this question, however, I am less likely to invest in the stock. If the reason you like a stock is echoed by all the analysts that follow the stock and the media generally, chances are its already priced into the stock and the prospects aren't as good.

Thus, I think the quote applies equally as much to investing as it would to business.

- Thomas.




PM Capital Absolute Performance Fund