Whenever anyone looks back at a longish period of equity investing, it's almost a tradition to say that there were a lot of ups and downs. But I'll resist saying so. The reason is that such a statement is pointless - it's what statisticians call a 'vacuous observation'. Something that is true, and yet pointless.
There are always ups and downs in the equity market. In fact, it would be news if there was an extended period of time when there were no major ups and downs. Equity investors who choose and buy their own stocks have a much greater first-hand feel of the gyrations of the market because at least some of their stocks would have moved wildly.
However, for the last few years, it has been clear to any thinking investor that something bigger than this normal volatility is afoot. The wind of change that is driven by technology has now become a storm of transformation. In just a few years, not just companies, but entire industries are looking completely different from what they used to be. Entirely new kinds of businesses have been created. Google and Facebook are the biggest examples but there are many others. Nothing like Uber or Ola ever existed earlier. I mean taxis are not a new phenomenon, but the scale at which such companies can organise and aggregate information transforms the simple act of calling a taxi into a completely new kind of activity.
When I look at any list of investment-worthy companies, I'm hard-pressed to imagine which of them is guaranteed not to be impacted by some technological change. For example, there are currently 25 stocks on the recommended 'buy' list of our premium service, Value Research Stock Advisor. All these are great investments that are available at attractive valuations today and I myself have investments in all of them. They're from a wide variety of sectors and are of different sizes. The smallest are small caps and the largest are some of the most valuable companies in India. And yet, can I claim that our research team, having chosen these companies, can just ignore them for five or ten years? No, not at all. At that kind of time horizon, even companies whose businesses look most stable and set can be hit by some tsunami of change. Being an investor nowadays means constant attention and imaginative research.
Many years ago Amazon's founder and CEO Jeff Bezos wrote, "I very frequently get the question: 'What's going to change in the next 10 years?' And that is a very interesting question; it's a very common one. I almost never get the question: 'What's not going to change in the next 10 years?' And I submit to you that that second question is actually the more important of the two - because you can build a business strategy around the things that are stable in time. It's impossible to imagine a future 10 years from now where a customer comes up and says, "Jeff, I love Amazon; I just wish the prices were a little higher." "I love Amazon; I just wish you'd deliver a little more slowly." Impossible.
Bezos has put his finger right on not only the most important thing in running a business, but also in being an equity investor. When we look at a company, the most important thing is not necessarily what is changing fastest. Instead, it is likely to be what is not changing and what will likely never change. Jeff Bezos, who has built a company that's the ultimate symbol of change and disruption, is focused not on what will change but on what is not.
As investors, we should be, too.
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