'When you are in a commodity business, the only way thrive is to be the low cost producer. And when you are selling money (i.e. banking), you're in a commodity business'
I wrote about cost leadership importance in my Cyclicals Framework. A cyclical that has positive operating margins at the bottom of the cycle is not a marginal producer and is therefore a good candidate to survive the cycle.
Reading the bio of Jamie Dimon. It talks about a simple strategy that works great in cyclical industries: build capital conservatively during the boom and don't expand, only to buy distressed comps during the bust. This worked great in banking, but also for JBS in meatpacking.
Jan 16
at
10:44 PM
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