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Orbis Investments: Capital: Can companies have too much of a good thing?

Investment news for Financial Advisers & Paraplanners

24 Jun 2019

Orbis Investments: Capital: Can companies have too much of a good thing?

In the centre of London, there is a market whose history stretches back to the first century. Built on the site of a Roman forum, Leadenhall was once the biggest market in Britain, with its merchants eventually selling poultry, cheese, meat, and fish.

If lots of people are clamouring for cheese, merchants can sell it at higher prices, and the buyers won’t get much for their money. The merchants may be tempted to bring more of it to market, and even produce of only marginal quality may find buyers. But if few people want to buy cheese, they’ll be able to buy at low prices, even if they insist on buying only the best bits. Merchants may bring less cheese to market, and less tempting cuts may go unsold.

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