Peter Lynch on Rock Pits
Posted this a while ago, somewhere else..thought I'd repost it here..
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Peter Lynch's book 'One up on Wall Street'
Just browsing through it, and right there on page 140 is the masters comments on aggregate -
"I’d much rather own a local rock pit than own Twentieth Century Fox, because a movie company competes with other movie companies, and the rock pit has a niche. Twentieth Century-Fox understood that when it bought up Pebble Beach, and the rock pit with it. Certainly owning a rock pit is safer than owning a jewelry business. If you’re in the jewelry business, you’re competing with other jewelers from across town, across the state, and even abroad, since vacationers can buy jewelry anywhere and bring it home. But if you’ve got the only gravel pit in Brooklyn, you’ve got a virtual monopoly, plus the added protection of the unpopularity of rock pits.
There’s no way to overstate the value of exclusive franchises to a company or its shareholders. Inco is the world’s great producer of nickel today, and it will be the world’s great producer in fifty years. Once I was standing at the edge of the Bingham Pit copper mine in Utah, and looking down into that impressive cavern, it occurred to me that nobody in Japan or Korea can invent a Bingham pit. Once you’ve got an exclusive franchise in anything, you can raise prices. In the case of rock pits you can raise prices to just below the point that the owner of the next rock pit might begin to think about competing with you. He’s figuring his prices via the same method".