“One general law, leading to the advancement of all organic beings, namely, multiply, vary, let the strongest live and the weakest die.”

—Charles Darwin, The Origin of Species

Elwood: It’s 106 miles to Chicago, we got a full tank of gas, half a pack of cigarettes, it’s dark, and we’re wearing sunglasses.

Jake: Hit it!

—The Blues Brothers


  • A competitive life‐cycle framework can help investors think critically about the challenges a firm will confront as it develops and quantify its probability of success.
  • Four states of development can be described by profitability and expected growth:
    • Question Mark (low profitability and high growth)
    • Star (high profitability and high growth)
    • Cash Cow (high profitability and low growth)
    • Dog (low profitability and low growth)
  • New firms typically start as Question Marks; less than 13% become Stars.
  • Cash Cows exhibit the highest profit persistence and lowest CFROI volatility. An elite subgroup of Cash Cows and Stars are unusually persistent. HOLT calls these stocks eCAPs, which is a badge of honor that signifies impressive competitive advantage.
  • Dogs have the largest variability in future CFROI. Most Dogs fail to fix their business.
  • Companies “exit” at all points. By exit, we mean the corporate entity ceases to exist as a stand‐alone enterprise. Only 50% of companies survive as a listed entity for 10 years. Most companies are acquired or merge as they age; about 2% go ...

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