{"id":422632,"date":"2020-10-21T04:13:58","date_gmt":"2020-10-21T08:13:58","guid":{"rendered":"https:\/\/financhill.com\/blog\/?p=422632"},"modified":"2020-09-12T14:45:26","modified_gmt":"2020-09-12T18:45:26","slug":"stocks-that-are-monopolies","status":"publish","type":"post","link":"https:\/\/financhill.com\/blog\/investing\/stocks-that-are-monopolies","title":{"rendered":"7 Stocks That Are Monopolies (Virtually)"},"content":{"rendered":"

Stocks That Are Monopolies:<\/em> The relationship between monopolies and US consumers is full of contradictions. Americans are suspicious of companies that have a stranglehold on their respective industries, and they keep a close eye on whether and how those companies use their size and market share to drive profit.<\/span><\/p>\n

However, they appreciate the benefits offered by economies of scale, and they are quick to patronize massive market leaders rather than the small family businesses desperately trying to compete. This behavior tends to encourage rather than discourage large businesses from growing their market share. <\/span><\/p>\n

Investors know there are a number of stocks that are monopolies (virtually). The question is whether that massive market presence is an advantage or a disadvantage for shareholders. <\/span><\/p>\n

Are Monopolies Illegal? <\/strong><\/h2>\n

The definition of monopoly – pure monopoly – is a company that literally has no competition. No other sellers of the particular product or service exist. For example, there was a time when Microsoft<\/a> was the only company in the world that sold software and operating systems for computers<\/strong>, so entities in search of computer-based tools had exactly one option for sourcing these products.<\/span><\/p>\n

Pure monopolies are rare, but a number of today\u2019s companies have what can only be described as a virtual monopoly. Though alternatives exist, the virtual monopolies dominate the market to the extent that competitors can\u2019t gain much traction. Virtual monopolies can set prices and standards for the industry without fear of losing business. <\/span><\/p>\n

In theory, a virtual monopoly shouldn\u2019t be a problem, but in practice, the system doesn\u2019t tend to work in consumers\u2019 best interests<\/strong> unless it is monitored very closely. Without competition, monopolies can set excessive prices, deliver poor-quality products, and stamp out alternative products and services to generate profits for themselves. <\/span><\/p>\n

While the law doesn\u2019t prohibit monopolies outright, given the dangers, a variety of regulations have been put in place to keep such companies honest. The Sherman Antitrust Act<\/a> is one of the biggest, and it has been used to break up companies that prevented competition<\/strong>, as well as prevent mergers and acquisitions that could have created a virtual monopoly. <\/span><\/p>\n

Such regulations can put a damper on the profits of monopolies, but all in all, investors tend to like these stocks. After all, such market share is more likely than not to deliver growth and value over time, reducing some of the risk inherent in purchasing any security. <\/span><\/p>\n

7 Stocks That Are Monopolies – Virtually <\/strong><\/h2>\n

These seven companies meet the criteria for monopolization of their respective industries. While they are not completely without competition, they have enough market share to control the pricing, quality, and distribution of related goods and services. <\/span><\/p>\n

Social Media: Facebook<\/strong><\/h3>\n

While there have been other social media platforms before and since Facebook arrived on the scene, most would agree that the company sets the industry standard. In addition to its namesake, Facebook owns Instagram and WhatsApp, putting it in a leadership position when it comes to user-generated content<\/strong>. <\/span><\/p>\n