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# 金融代写|财务分析与估值代写Financial Analysis and Valuation代考|ELE3750 The Key Question: Sustainability of Competitive Advantage

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## 金融代写|财务分析与估值代写Financial Analysis and Valuation代考|The Key Question: Sustainability of Competitive Advantage

Armed with an understanding of a firm’s strategy and a mastery of the details, the analyst focuses on the key question: How durable is the firm’s competitive advantage?

Microeconomics tells us that competition drives away abnormal returns. With few exceptions, the forces of competition are at play, and the critical question is how long those forces take to play out. The key to adding value is to design a business where abnormal returns endure for as long as possible. Firms attempt to counter the forces of competition to gain competitive advantage. The more enduring the competitive advantage, the more the firms generate value.
The business strategy and all of the economic factors listed ultimately bear upon competitive advantage. Innovative strategies are adopted to “get ahead of the competition.” Products are designed to allure customers from the competition. Brands are built to maintain enduring customer loyalty. Patent protection is sought. Innovative production technologies are adopted for cost advantage. And, yes, politicians are lobbied to protect firms from competition. The inside analyst designs strategies to maintain competitive advantage. The outside analyst understands those strategies and strives to answer the question as to the durability of the firm’s competitive advantage.

## 金融代写|财务分析与估值代写Financial Analysis and Valuation代考|BUBBLE, BUBBLE, TOIL, AND TROUBLE

History serves up lessons, and the last two decades has provided many. Trillions of dollars were invested in stock markets around the world in the 1990s. By the end of that decade, nearly 50 percent of adults in the United States held equity shares, either directly or through retirement accounts. In the United Kingdom, this figure was 25 percent, in Germany, 15 percent, and in France, 13 percent. These numbers were up considerably from 10 years earlier. Stock markets in Asia and the Pacific also became very active. Firms in Europe and Asia that once went to banks for capital began raising funds through public stock markets. An equity culture was emerging where firms traded more and more with individual equity investors or their intermediaries. Unfortunately, the growing equity culture was not matched with a growing understanding of how to value stocks. Trillions of dollars were lost as a stock market bubble burst in 2000 and investors found their savings shrunk significantly.

The experience repeated that of a decade earlier in Japan. On December 29, 1989, the Nikkei 225 Index of Japanese stocks soared to a high of 38,957 , a 238 percent gain over a five-year period. Twelve years later in 2001, the Nikkei 225 fell below 10,000 for a loss of over 75 percent from the 1989 high. By 2005 , the index had recovered to only 11,800 , and stood at 9,800 in 2011. The stock prices of the 1980s were a bubble, and the bubble burst. The repercussions in Japan were long-term. Some claim that equity investing is rewarded in the long run, but the long run has been a long time coming. On March 10, 2000, the NASDAQ Composite Index in the United States peaked at 5,060, up 574 percent from the beginning of 1995. By mid-2002, the index was below 1,400, down 75 percent from the high, and was still only at 2,750 in 2011 . The S\&P 500 Index was down 45 percent and the London FTSE 100 and the Eurotop 300 had lost more than 40 percent. Again, a bubble had burst, leaving investors to wonder how long the long run would be. We are reminded that the Dow Index did not recover its 1929 euphoric level until 1954. During the 1970s, after the bull market of the late 1960s, the Dow stocks returned only $4.8$ percent over 10 years and ended the decade down $13.5$ percent from their 1960 s high. As we saw in Box 1.1, the S\&P 500 returned only $4.7$ percent from 2000 to 2010 .

In January 2000, prior to the bursting of the bubble, Alan Greenspan, chairman of the U.S. Federal Reserve Bank, expressed concern. He asked whether the boom would be remembered as “one of the many euphoric speculative bubbles that have dotted human history.” In 1999 he said, “History tells us that sharp reversals in confidence happen abruptly, most often with little advance notice… What is so intriguing is that this type of behavior has characterized human interaction with little appreciable difference over the generations. Whether Dutch tulip bulbs or Russian equities, the market price patterns remain much the same.”

Indeed, while the usual reference to bubbles is to Dutch tulip bulbs in the seventeenth century or to the South Seas Bubble in the eighteenth century, there had been more recent experience. In 1972, the pricing of the technology stocks of the day-Burroughs, Digital Equipment, Polaroid, IBM, Xerox, Eastman Kodak-looked like a bubble waiting to burst. These stocks were part of the “Nifty Fifty” stocks, deemed a “must buy,” that included CocaCola, Johnson \& Johnson, and McDonald’s Corporation. The average P/E ratio for the Nifty Fifty was 37 in 1972, nothing like the P/E of over 300 for the NASDAQ 100 stocks in 2000, but considerably above the historical average to that point of 13 . The bubble did burst. The S\&P $500 \mathrm{P} / \mathrm{E}$ ratio declined from $18.3$ in 1972 to $7.7$ by 1974 . The FT 30 -share index in London (prior to the days of the FTSE 100) dropped from 543 in May 1972 to 146 in January $1975 .$ Stock market bubbles damage economies. People form unreasonable expectations of likely returns and so make misguided consumption and investment decisions. Mispriced stocks attract capital to the wrong businesses. Entrepreneurs with poor business models raise cash too easily, deflecting it from firms that can add value for society. Investors borrow to buy paper rather than real productive assets. Debt burdens become intolerable. Banks that feed the borrowing run into trouble. Retirement savings are lost and a pension crisis develops. And, while we have learned something of macroeconomic management since then, the euphoria of the late $1920 \mathrm{~s}$ and the subsequent depression of the $1930 \mathrm{~s}$ teach us that systematic failure is possible. Indeed, that was the fear in the market crash of $2008 .$ Bubble, bubble, toil and trouble.

## 金融代写|财务分析与估值代写Financial Analysis and Valuation代考|BUBBLE, BUBBLE, TOIL, AND TROUBLE

2000 年 1 月，在泡沫破灭之前，美国联邦储备银行主席艾伦格林斯潘表达了担忧。他问，繁荣是否会被人们铭记为“人类历史上众多欣快的投机泡沫之一”。1999 年，他说：“历史告诉我们，信心的急剧逆转是突然发生的，通常是在没有事先通知的情况下发生的……令人着迷的是，这种行为已经成为人类互动的特征，几代人之间几乎没有明显的差异。无论是荷兰郁金香球茎还是俄罗斯股票，市场价格模式都保持不变。”

## MATLAB代写

MATLAB 是一种用于技术计算的高性能语言。它将计算、可视化和编程集成在一个易于使用的环境中，其中问题和解决方案以熟悉的数学符号表示。典型用途包括：数学和计算算法开发建模、仿真和原型制作数据分析、探索和可视化科学和工程图形应用程序开发，包括图形用户界面构建MATLAB 是一个交互式系统，其基本数据元素是一个不需要维度的数组。这使您可以解决许多技术计算问题，尤其是那些具有矩阵和向量公式的问题，而只需用 C 或 Fortran 等标量非交互式语言编写程序所需的时间的一小部分。MATLAB 名称代表矩阵实验室。MATLAB 最初的编写目的是提供对由 LINPACK 和 EISPACK 项目开发的矩阵软件的轻松访问，这两个项目共同代表了矩阵计算软件的最新技术。MATLAB 经过多年的发展，得到了许多用户的投入。在大学环境中，它是数学、工程和科学入门和高级课程的标准教学工具。在工业领域，MATLAB 是高效研究、开发和分析的首选工具。MATLAB 具有一系列称为工具箱的特定于应用程序的解决方案。对于大多数 MATLAB 用户来说非常重要，工具箱允许您学习应用专业技术。工具箱是 MATLAB 函数（M 文件）的综合集合，可扩展 MATLAB 环境以解决特定类别的问题。可用工具箱的领域包括信号处理、控制系统、神经网络、模糊逻辑、小波、仿真等。