“I won't dwell on other glamorous businesses that dramatically changed our lives but concurrently failed to deliver rewards to U.S. investors: the manufacture of radios and televisions, for example. But I will draw a lesson from these businesses: The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage. The products or services that have wide, sustainable moats around them are the ones that deliver rewards to investors.”Warren Buffett

“Gonna change the world” is what people believed about e-commerce and the Internet. A few of the companies did, as had pioneers in radio and airlines. However, “change the world” proved once again to be far from synonymous with “make money for investors.” Howard Marks

“Capitalising on rapid growth industries, as the Internet speculators have so painfully discovered, is often fraught with more peril than prize. Easy money is an oxymoron” Frank Martin

“The 20th century has spawned a momentous series of inventions that have changed forever the way we engage in nearly every aspect of our daily lives. Think of how far Americans have progressed from the snail’s pace of the horse, buggy, ship, and steam locomotive to the speed, comfort and convenience of the automobile and then the airplane. In communications, we’ve gone from the Pony Express to the telegraph to worldwide communications. In media, we’ve progressed from local performances to national book chains and “talking colour pictures”.   Chronicles of the pervasive impact of these marvels of ingenuity where we live, work and play would fill a large library. Surprisingly, as awe-inspiring and life-changing as these inventions have been, almost without exception they were a boon to consumers and a disappointment to investors” Frank Martin

“If you were to go back to 1921, there were hundreds of automobile manufacturers in the US. At that time, the United States was an emerging market in the automobile industry. There were about 7.5 million cars on the roads in the country and about 2 million cars sold that year. That number was growing at about 25% a year. It was a high growth industry. Any way you looked at it, you would be correct in assessing that automobile ownership and growth was going to be very significant in the United States for a very long period of time. Because of that reality, there was a massive surge of companies that went public that focused on manufacturing automobiles. A lot of them had the word “motor” in them. If you wanted to get funded and go public, you could come up with some auto manufacturer with the name “motor” in it and you would get a huge valuation. About 10 years later in the 1930s, we were left with three auto manufacturers. Basically those who invested in the auto business ended up holding the bag. It turned out to be a terrible investment, even though the long-term trajectory of growth of the industry was absolutely right on.” Mohnish Pabrai

"If new technologies are generally applicable, then competition means that the benefits will go to consumers.  Not just most of them, all of them.  New technology has always been better news for customers than shareholders"  John Kay

"Charlie and I avoid businesses whose futures we can’t evaluate, no matter how exciting their products may be. In the past, it required no brilliance for people to foresee the fabulous growth that awaited such industries as autos (in 1910), aircraft (in 1930) and television sets (in 1950). But the future then also included competitive dynamics that would decimate almost all of the companies entering those industries. Even the survivors tended to come away bleeding.    Just because Charlie and I can clearly see dramatic growth ahead for an industry does not mean we can judge what its profit margins and returns on capital will be as a host of competitors battle for supremacy."  Warren Buffett

"I still believe that the Internet is probably the most important industrial revolution in many decades. But we still have to be very selective because a growing industry is not synonymous with profitability. On the contrary. To have a little perspective on that, here is a passage of a Reader’s Digest article published in October of 1983 entitled “The computer: the servant of the future”:  It is believed that annual sales of personal computers will go from $350 million (M) in 1983 to some $2 billion (G) in 1987. In June 1982, Commodore was the market leader with 23,000 units sold for $28M followed by Apple and Tandy with $20M each. But new comers are plenty: Atari, Timex Sinclair and Coleco are now looking for a piece of the action. Also, Osborne is now putting on the market a portable computer that could be stored in an attaché-case."   This article – would you believe? - is only 18 years old. Sales growth of PCs turned out to be much higher than anticipated even by the most optimistic forecasters. And what kind of return would an investor had received would he had bought all the companies mentioned? Probably, he would have lost almost all of his investments?  The best stock would have been Apple Computer [Q:AAPL], which is today still the same price as it was 15 years ago (and they stopped paying dividends in 1997)." Francois Rochon 2001

"The primary driver of healthy corporate profitability is a favourable supply side not high rates of demand growth.   Hence, it is possible for there to be rapid growth in an industry which brings little or no benefit to investors. In fact, strong growth in demand is often the direct cause of value destruction as it encourages a flood of capital into the industry, eroding returns. It is not hard to think of examples. Technological advancement in digital semiconductors has revolutionized technology and economic productivity. Yet the experience of investors in the semiconductor industry has been a depressing one. A fragmented supply side allied with high capital intensity and low product differentiation has led to long-term destruction of economic value. It is only very recently, with an improvement in the supply side via consolidation, that the outlook has improved The airlines have revolutionized travel over the last 60 years, with attendant economic benefits, but again a poor supply side has led to a very bumpy ride for investors.  Even the most bullish tech analyst would not have predicted how widespread mobile phones have become, and yet such foresight would not have helped long-suffering shareholders in Nokia, Motorola or Blackberry-maker RIM" Marathon Asset Management