Why knowing economics is important for fundamental investors

A really good article about Market Structure. Its worth a read!

Ryan Goh: Life through these eyes

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As Warren Buffett once said:

When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.

In my experience, many fundamental investors focus on the financials without knowing much about the economics of the business. It’s true that the economics of the business affects its profitability and hence, just looking at the financials can give us an insight into the economics of the business. However, just looking at the financials means that we may not appreciate the true nature of the business. Appreciating the true nature of the business can help us foresee how the business will…

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