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Survivorship biases, arising from the fact that we see only winners and get a distorted view of the odds. What we don't generally consider is that the very same thing, with the very same characteristics, just as easily could have been dismal failure.

Fine statistical theory. Statistics apply to populations and are a useful tool for index fund investing for example. But as Garrison Keillor likes to remind us, all the kids in Lake Wobegon are above average, no matter what the statisticians might predict.

Stock-picking seeks the exceptional cases, where statistics don't help much. If our interest here is what Skype means to eBay and vice-versa, these are not run-of-the-mill companies. The outcome is unlikely to match the statistical average.

eBay management makes their case for the Skype purchase based on synergies they think they can create, building on the network effect. Their track record of success in exploiting the network effect in those two businesses suggests to me that they're not just blowing smoke (or smoking blow?). Their appreciation of the network effect was a prime reason they spent so much to buy the leader rather than rolling their own VoIP technology.

I'm personally unconvnced goog has a sustainable advantage...the switching are just too low...I'm curious to see if goog will still be so succesful some years from now. Anyway, the stocks reflects way too high expectations. The same can be said about ebay.

Wow, it takes a lot to convince you! I tend to think that eBay has proven its merit and is gonna do well for quite a bit longer. And Google has got fearsome old Microsoft quaking in its boots.
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