“Everything changes, nothing remains without change.” Buddha

This famous quote from the Buddha has applications to many aspects of our lives. In this post, I’ll merely touch upon it’s significance to investment strategy.

From my perspective, Investing is simply the analysis of change.

Whether it’s on a macro-economic scale, or on a more micro-corporate level, successful investing requires the ability to spot a change, whether positive or negative, and understand the implications of that change for the future economic outlook. Significant profits are usually made when the change potentially creates a sharp reversal of current economic circumstances.

The investment process can be summarized as follows:

• Understand What Went Wrong (or Right)
• Discover What Has Changed
• Articulate Why This Change Matters and What’s Next

The reason why investing is so incredibly difficult is simply because like many parts of our lives, we refuse to acknowledge and accept change, even if the reality is that nothing remains without change. Unfortunately, we generally remain victims of the most recent past and react with surprise when circumstances change and the future suddenly becomes quite different than the past.