My portfolio strategy (part 3)

I use the 7 Powers framework from the book “7 Powers: The Foundations of Business Strategy” by Hamilton Helmer. It’s a killer framework for understanding why some businesses create lasting value and compound returns over time.

Each “Power” is a sustainable strategic advantage that lets a company generate outsized returns for a long time. I ask the 7 questions for each stock I am considering to buy.

1. Counter-Positioning

• What it is: A new entrant adopts a superior business model that incumbents can’t copy without damaging their own biz.
• Example: Netflix vs. Blockbuster. Blockbuster couldn’t move to streaming without killing its DVD revenue.
• Why it matters: Creates asymmetric pressure; the old guard is paralyzed.

2. Scale Economies

• What it is: Unit costs drop as volume increases.
• Example: Amazon, Costco. Bigger = cheaper = stronger moat.
• Why it matters: Hard to compete if you can’t match their cost base.

3. Switching Costs

• What it is: Customers stick around because switching is painful.
• Example: Adobe Creative Cloud, Microsoft Office, Salesforce.
• Why it matters: High retention = stable cash flows = compounding machine.

4. Network Effects

• What it is: The product gets better as more people use it.
• Example: Meta, Visa, LinkedIn.
• Why it matters: Leads to dominance, creates a feedback loop of growth.

5. Branding

• What it is: Emotional or symbolic value, not just functional.
• Example: L’Oréal, Hermès, Apple.
• Why it matters: Lets companies charge premium prices and keeps customers loyal even if alternatives exist.

6. Cornered Resource

• What it is: Exclusive access to a critical asset — talent, IP, data, supply.
• Example: ASML (EUV tech), Novo Nordisk (Ozempic IP), Ferrari (brand + heritage + team).
• Why it matters: If no one else can get it, you win.

7. Process Power

• What it is: Unique internal processes that drive efficiency, innovation, or quality — and are hard to copy.
• Example: Toyota (lean manufacturing), Amazon (logistics, culture of innovation).
• Why it matters: Long-lasting edge baked into the org’s DNA.

If I had to chose one, Network effects would be the most important one for me.

Here are my current holdings:

$MSFT (+0,41%)

$META (-1,26%)

$MA (-2,45%)

$BRK.B (-0,45%)

$AMZN (+0,72%)

$ASML (-0,15%)

$MSCI (-3,27%)

$MC (-2,64%)

$BKNG (-0,25%)

$SPGI (-0,43%)

$ADBE (-2%)

$NOVO B (-3,08%)

$AIR (-0,76%)

$CDNS (-0,34%)

$OR (-2,48%)

$IDXX (-1,33%)

$EL (-3,31%)

$FTNT (-1,24%)

$LULU (-0,95%)