"Stories about gradual improvements rarely make the front page"
This means that significant but slow changes in the world sometimes get missed - and are rarely acted upon.
As an investor, you need to identify these significant but slow shifts in the world, because they provide opportunities; noticing and acting upon fundamental changes in consumer behaviour or structural changes in the world, is difficult, but - if done correctly - will result in profits. For example, if someone had noticed the potential for e-retail as Amazon began delivering books, they may have invested early - long before Amazon became a FAANG and a household name. At the very least, someone who had noticed these changes could have avoided losses, by exiting positions in brick and mortar retailers. Similarly, if someone had noticed the trend of moving away from cotton to synthetics before others, they could have invested heavily in companies which were involved in the manufacture of synthetic garments - or at the very least, avoided losses by exiting positions in textile manufacturers. Another example is the disruption of the TV industry, which has moved from cable to on-demand streaming; this change is discussed a lot nowadays. But, if someone had noticed the change early enough, they could have benefitted greatly from the shift - or at the very least avoided losses, by exiting positions in cable companies.
Recognising these structural shifts is even more important for companies than investors. Incumbents, which resist change and ignore slow changes are inevitably faced with problems. A large number of retailers, and several cable companies did not change their business models till it was too late. This was despite the fact that Netflix and Amazon have been spoken about on all media outlets. Today, they are undertaking radical re-structuring just to stay afloat.
Warren Buffett says, "chains of habit are too light to be felt until they are too heavy to be broken". Similarly, structural changes are too insignificant to be noticed until they have already taken place and hindsight enables us to realise that they have occurred.
This means that significant but slow changes in the world sometimes get missed - and are rarely acted upon.
As an investor, you need to identify these significant but slow shifts in the world, because they provide opportunities; noticing and acting upon fundamental changes in consumer behaviour or structural changes in the world, is difficult, but - if done correctly - will result in profits. For example, if someone had noticed the potential for e-retail as Amazon began delivering books, they may have invested early - long before Amazon became a FAANG and a household name. At the very least, someone who had noticed these changes could have avoided losses, by exiting positions in brick and mortar retailers. Similarly, if someone had noticed the trend of moving away from cotton to synthetics before others, they could have invested heavily in companies which were involved in the manufacture of synthetic garments - or at the very least, avoided losses by exiting positions in textile manufacturers. Another example is the disruption of the TV industry, which has moved from cable to on-demand streaming; this change is discussed a lot nowadays. But, if someone had noticed the change early enough, they could have benefitted greatly from the shift - or at the very least avoided losses, by exiting positions in cable companies.
Recognising these structural shifts is even more important for companies than investors. Incumbents, which resist change and ignore slow changes are inevitably faced with problems. A large number of retailers, and several cable companies did not change their business models till it was too late. This was despite the fact that Netflix and Amazon have been spoken about on all media outlets. Today, they are undertaking radical re-structuring just to stay afloat.
Warren Buffett says, "chains of habit are too light to be felt until they are too heavy to be broken". Similarly, structural changes are too insignificant to be noticed until they have already taken place and hindsight enables us to realise that they have occurred.
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