It’s an old story, but… Back in his prime, reporters used to ask Hockey Superstar Wayne Gretzky why he was so great. He wasn’t big, he wasn’t fast; so, why was he arguably one of the greatest hockey players ever? His response: was that he just skated toward where he thought the puck was going to be. Think of that when you invest in Stocks!
Eastman Kodak and Polaroid, two photography legends of yesteryear, failed to keep up with changes in the future technology of their industry; because, they didn’t want to jeopardize their Cash Cow–selling film. Likewise, Microsoft has been tied too closely to desktop computers, and making too much money from “Windows”, to adjust to the shift to portable computers–Smartphones, Pads and who knows what’s coming.
Similarly, Sears and K-Mart didn’t realize the potential they had, due to their huge sales volumes, to negotiate better prices from their suppliers. J.C. Penney focused on price, while Macy’s realized that consumers still wanted to be stylish. Low-prices may be a shopping concern when the economy is weak; but, people still want to look good.
Going back to desktops, Hewlett Packard is struggling and DELL has been negotiating to sell itself to a private investment group, which includes its Founder, Michael Dell. More and more computing these days is done on “The Cloud”, rather than on computer hard-drives. IBM, on the other-hand, sold its desktop business to Lenovo, a Chinese Company, in 2004–thus keeping up with technological changes. “Big Blue” then shifted its focus.
Does that mean that Coke, Hershey bars, Budweiser beer, Maxwell House coffee (Kraft) or Crest toothpaste (J & J), etc. will be replaced any time soon? No, I’m not saying that; because, Consumer Staples (personal or household necessities) tend to be low-tech. Also, most people will think twice about products that they personaly consume. That’s why Coke, Oreos, Cheerios, etc. have been popular Consumables for many years.
But, I suggest that, when it comes to investing for the future, you should try to think forward and study ahead to do your best to make sure that your investments will still be working for you when you need to start tapping into them. But, modify over time.