The Zoom Lesson

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I talk about this all the time when I talk about investing in stocks. Don't buy trends. Buy companies. Zoom is not the only example of this. It's just a recent example of this. FitBit was another one not so long ago. So was Peloton. These are companies that become very popular and ride a wave for a variety of reasons, but also eventually fall out of favor because either the circumstances around why they were successful no longer exists or because the newness or uniqueness of the products wavers. It seems like a no-brainer to say "don't invest in things or individual products," but rather invest in businesses who do good, solid business, who sell things that have lasting value. But people do this all the time. They see a company going bezerk and they want to get onboard, failing to look deeper into what the company is actually doing—or what they can do later. In other words, be able to identify when something is real and when something is just fancy, new or exciting. Trendy. Beware who is most likely a one-trick-pony. Take IBM back in the day, or even a company like Apple. What they brought to the table was something fancy, new and exciting. But in a different way than something like a FitBit or a visual communications port or an exercise machine. These companies had products that would change the way we did things and had an actual, definable purpose. You knew that the products they were selling would not simply go away. At the same time, understanding the vision and ingenuity of the company behind the products is also very important to note. IBM, for example, did not become the dominant computer maker. But it did other things. It could do other things. It had the ability to be innovative and creative and to be able to adapt itself to whatever market changes were occuring—and even if it would not be successful in the computer market itself, it would be able to find a way to be complementary to the computer market in some useful and profitable way. Invest in things that are needed, useful, resourceful, that have purpose and in companies that have the ability to recognize trends and busts and be able to constantly reinvent themselves with changing interests, appetites, or markets. Kodak got it wrong. Kmart got it wrong. Blockbuster got it wrong. AOL got it wrong. The companies and businesses that will be your best investments will be ones who are ahead of the curve and in a constant forward-thinking mode. Always looking to the future and not only relying on the present.