First blog in English

I actually had a habit to write blogs. However, this time, I decide to try to write blogs in English. Two purpose: 1. Practice my English writing; 2. practice my financial knowledge.
The topic of my blog will focus on financial analysis, including company analysis, stock analysis, industry analysis, market analysis, and risk management. I mostly wrote it to myself. And each of my blog won't be too long because I want to keep it for long.

As the first blog, I would like to write something general.

Today's market is totally different from the market 50 years ago, because the technology has changed. Always, an age of transition comes out of the great technology revolution. The current market is the result of the information technology, while that age of 50 years ago is the product integration age. Thus, I would like to call todays' business is information-integration age. 

50 years ago, the information cost is too large to be managed by one certain company. Hence, the company has limited scale and shared the information cost through division. the only way to improve the economic profit is integrating the production process, which is the economic of scale of production process. They named the integration method as industry chain integration, which, basically, it should have physical entity.

Presently, it is different. The information is the core because it is the fundamental of the knowledge and the knowledge is the origin of the profit. It is not a hot topic to talk about pipeline-style innovation, while the point is concentrating on the R&D and customer sides rather than production process. If we used the old industry chain theory to explain this idea, it fits the smiling curve, which is the value is created from R&D and end market instead of producing. That is also the reason why the product process has been shifted to Japan and Korea first, then to China and India.

The merge also follows this principle that big company will enjoy the low market cost and internalize the outside cost, because it is cheap. They will acquire the company that is full of information base and probably can create knowledge, like Google acquired Nest.

Therefore, I would like to set two principles in my investment philosophy,
1. Only analyze the industry that work with the information that can reduce the information cost.
2. Only analyze the company that focus on either the R&D or end market or both.