Expectations Investing

Competitive strategy analysis lies at the heart of security analysis. The

surest way for investors to anticipate expectations revisions is to foresee

shifts in a company’s competitive dynamics. These shifts lead to a

revised outlook for sales, costs, or investments—the value triggers—

and initiate the expectations investing process. For investors, competi-

tive strategy analysis is an essential tool in the expectations game.

THE DUAL USES OF

COMPETITIVE STRATEGY ANALYSIS

The competitive strategy literature focuses largely on prescriptions for

management action. But investors can use the same strategic tools,

albeit in a different way.

Management’s objective ...