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This is an email from The Alpha Beta Report, a newsletter by Alpha Beta Blog.

Software’s Competitive Advantages

I’ve been kicking the tires on a few software stocks lately. Given the high valuations of most software stocks (especially the COVID winners), one question I wanted to better understand is — why software tends to be winner take all. In winner take all markets, once a clear group of winners is established, those companies are able to extract most of the available profits and earn growing cashflows over long periods of time because there is little competition.

So if software is winner take all, that would help justify some of the high valuations we are seeing (though I would still argue that some valuations like Peloton’s, see below in the links, are stretched way too far).

The links this week are mostly pieces that I wrote as I explored this question and things related to it.

Also I want to welcome Suraj R to Alpha Beta Blog. His great piece, Bitcoin An Explainer, is a nice primer on how bitcoin works and some of its big picture benefits and challenges. I must admit that I am not really up to speed on bitcoin and the crypto space as a whole, so I found his article both illuminating and enjoyable.

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Tony Yiu

Tony Yiu

94K Followers

Data scientist. Founder Alpha Beta Blog. Doing my best to explain the complex in plain English. Support my writing: https://tonester524.medium.com/membership