Weekend Reading

4 May 2019 | by Ensemble Capital

A summary of this week’s best articles. Follow us on Twitter (@INTRINSICINV) for similar ongoing posts and shares.

How Schwab Ate Wall Street (Lisa Beilfuss, @LisaBeilfull, The Wall Street Journal)

As the finance industry continues to evolve, keeping a competitive edge with your business can prove to be quite a challenge. The phrase “Talk to Chuck” might come to mind when thinking about a finance company that has experienced considerable growth since it went public in 1987.  Charles Schwab has increased their suite of services available for consumers and has followed a formula of keeping prices low which has led them to become a globally recognized financial institution.  This article looks into the history of the company and the practices Charles Schwab has used to keep their competitive advantage in an increasingly challenging space.

Changing San Francisco is Foreseen as a Wealthy Haven for Wealthy and Childless (Wayne King, The New York Times)

It’s no secret that for the last decade the San Francisco real estate market has been booming and as wage growth struggles to keep up with the cost of housing, many SF residents can be left feeling squeezed out.  History seems to be repeating itself, so much so that The New York Times republished an article on this very topic from 1981.  The article goes on to discuss the demographics and how many of the residents live “nontraditional” lifestyles.  The various contributors to the increases in the cost of housing in San Francisco in the early 1980’s strike strong similarities to those forces that are driving up prices today.

Recessions vs. Bear Markets (Ben Carlson, @awealthofcs, A Wealth of Common Sense)

The stock market continues its upward trajectory for 2019 and for many investors, a strong market can give pause or concern about an upcoming pullback or even a recession.  Ben Carlson explores his thought process on this and how the overall stock market and the economy shouldn’t be thought of as one, but rather two separate entities.  “…frankly, the economy is not a market. It’s a collection of goods and services produced within a specific period of time and it’s much harder to measure than the stock market.”

Netflix Isn’t Being Reckless, It’s Just Playing a Game No One Else Dares (Netflix Misunderstandings, Pt. 3) (Matthew Ball, @MediaREDEF, Redef)

An “On-demand” mentality is something that has been becoming more normal in everyday life from ordering your laundry pickup from your smartphone to having your groceries delivered. Watching TV is no exception to this and Netflix has shown dominance in the space.  Netflix has been able to repeatedly increase pricing without losing a material amount of subscribers as they continue to invest billions in producing new content around the globe. Ensemble Capital’s President and Chief Investment Officer, Sean Stannard-Stockton was featured on CNBC discussing his thoughts on Netflix HERE.



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