First Quarter 2014 Update: The Economy of Evolution

Economy of Evolution: IllustrationWhile in the Galapagos Islands, Charles Darwin’s insights into finch beak gradation (of birds native to the islands) were incremental, possibly pivotal, to his theory of natural selection. Darwin’s prediction proved true, as certain finches lived or died depending on which species’ beak structure was best adapted for the most abundant food supply.

Investors and businesses share the same dilemma – the economics of evolution is the ability to survive and thrive by adapting to a changing environment. A business sustains its life through a steady diet (earnings) and safety (sustainable competitive advantages). An investor searches for food in the building blocks of return (investment specific IRR) that offer ample supply of asymmetric compounding opportunities (margin of safety)… Read PDF »