Hey guys I want to talk to you about
barriers to entry and why they’re so important when it comes to trading penny
stocks. The more barriers to entry there is to a certain industry, the less
competitors that are going to show up and compete with the underlying company.
So what you want to do is find a company that is operating the space thats already
up and running in an industry where the barriers to entry are excessively high.
That will keep them locked into their position, it’s also going to keep other companies
and competitors from showing up and trying to take part of that market share. Check this out you’re gonna love it! If there’s a business that sells
t-shirts the barriers to entry are excessively low you could have 20 or
2,000 new companies showing up tomorrow, they’re just going to try and sell t-shirts
and they’re going to try to take part of that market share. With the barriers
to entry being so low it’s less likely that the underlying company’s going to
be able to survive for quite as long because there will always be new
competitor showing up and trying to take part of the money that they’re making.
Now if you’re making something a little bit more complicated or something with
greater barriers to entry such as a robot that performs brain surgery
operations; there’s a lot of things that are going
to keep competitors from showing up and just competing in that space for, example
there’s going to be government regulations, there’s incredible levels of
technical know-how thats required. There’s a lot of advanced technologies that are
going to be involved, so the barriers to entry are so high that it’s not like
they’re going to turn around tomorrow and see two or three new competitors.
Which makes it great for companies which are already established in a space and
they’re already up and running in that spot or in that industry. The greater the
barriers to entry the better it is for those companies that are already up and
running, the established companies. It’s going to keep all the new
competitors out of the space some. Industries that have very low barriers
to entry might include things like I said earlier like t-shirts or you know
restaurants, that kind of stuff. There’s going to be lots of competitors for as
long as you can see down the road. Now things like nuclear power, or things that
require government regulations or approvals or FDA clearances those are
all barriers to entry. So companies in those spaces that are already passing
sort of the hurdles of those barriers, then they’re going to be in a better space,
better shape, and they’re going to have less upcoming competition from new
competitors. I hope you find this helpful, you guys
are awesome. I want you guys to subscribe to this channel so you can follow along
with us, we’ve got lots more videos coming up and you guys if you have any
questions just ask me in the comment field immediately below this video. We
look forward to helping you profit from penny stocks. Get in touch with this anytime.
I’ll talk to you soon, thank you so much!