BRIAN KANTOR: Golden eggs are no reason to kill a goose
The broad public interest in an efficient and strongly growing economy depends on the free play of unpredictable, dynamic market forces and successful innovation
THE most valuable companies are those with long-lasting, more or less permanent advantages over the competition — advantages that will not "fade away" over time. These are companies protected by the proverbial "moats", filled with crocodiles that can keep out potential invaders.Protection can be provided by brands that translate into good profit margins. Or by intellectual property that is difficult for competitors to replicate, to reduce their pricing power. Companies that generate a flow of ideas from large budgets for research and its growing application can also help keep competitors at bay.Such advantages for shareholders will be revealed in persistently good returns on the capital they provide. They will be firms run by managers who are well selected and properly incentivised, and governed by a strong board, including executive directors with well aligned financial interests in the firm. And the best growth companies will have lots of "runway" — a long pipeline of new projects...
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