That’s it – yelled the bumper sticker entrepreneur in Forrest Gump, ‘Shifts happen!’


Forgive the poetic license, but in testimony to congress a few weeks back, Mark Zuckerberg admitted that Facebook had “missed a major shift” – people’s changing use of social media

But how can one of the largest tech companies, with thousands of engineers, all the AI in the world, and a constant focus on the future,

not correctly predict the future?

Because ‘shifts happen’

They missed the shift to TikTok thinking they were simply, “short YouTube videos”

until it was too late and TikTok was all “we” wanted

IBM, Blackberry, Nokia, Kodak, Polaroid, Nortel networks, Yahoo, Alta vista, etc. all missed “shifts” early enough to stop a terminal decline in their businesses

Word perfect got “shifted” by Word – hardly “perfect” for their shareholders

How did Skype get “shifted” by Zoom during the pandemic? Group calls?

So how do you manage this risk?

By ensuring your fund managers don’t overpay for “quality” or “growth” because every company is vulnerable to “shifts”

But my clients suffer from FOMO – fear of missing out

Do you mean greed?

Well, here’s another FOMO to help focus their minds

Fear of Massive Overdraft

The ones they’ll be running when they’ve blown their retirement savings overpaying for investment “stories”

Yes, but I’m ok, my fund managers tell me they have “conviction” in the “brilliant management teams” running the companies they hold

Don’t you think those companies that got shifted, were also steered by management whom investors once considered “brilliant”?

And doesn’t “high conviction” just make it harder to “shift” when circumstances “shift”?

All it takes is one misstep and customers will “shift”

Recently, PayPal threatened to fine users $2500 for speaking out publicly against them

went down almost as badly as their share price this year

Ok not quite that badly, but could it start a “shift”?

Could Elon’s $8 start a “shift”?

He overpaid by $44bn if it is…

We’ve had decades of low inflation and falling interest rates – the perfect environment for over-capitalising earnings of “quality” / “growth” companies

But look at the numbers YTD

Growth is down 25%
Quality is down 20%
Value is down 6%

“Shifts happen”

What’s that?

Oh, you think it’s going to “shift” back?

So you’re holding thumbs that: (in order)

-inflation falls,
-central bankers drop rates back to 0%,
-tech companies start growing again,
-investors forget the pain of the past 2 years &
-pay the multiples they used to

Well some “shifts” are permanent and some last for years

so good luck with all that playing out

We don’t play “guess the Fed”

Preferring instead to buying decent businesses at attractive prices run by management who are on our side

Most are priced for disappointment, not brilliance

But our focus on #numbersnotnarrative

helps keep us out the “shift”