Applying Nature's Rules of Survival to Your Investment Portfolio


















By Anthony Rhodes








Be it the rules which govern the wondrous celestial objects which cir





culate above our heads, or the natural selection processes of the di






verse life forms that both live and reproduce closer to home, nature's





mandate of rewarding the fittest, and most adaptive, appears to be






repeated wherever one seems to look.













These rules are so clearly defined that they permeate all facets of our







daily lives, and exist as a universal constant in our ever-increasing un







derstanding, and expanding knowledge base, of the very nature of







existence, itself.












With the weight of this evidence being so overwhelming, it would seem






asinine for one to willingly attempt to challenge it. If the rules which reg






ulate all physical phenomena favors these two characteristics, then







certainly those which dictate the outcomes of our minuscule invest







ment portfolios must adhere to them, as well, correct?














My charge for this week is to convert this universal constant into a






viable investment strategy, and to use its concrete truths to increase






the value of your portfolio. Within this attempt, I would hope that you






will resist the temptation to add another description to this list (which






it certainly should not be present in), but mistakenly tends to be added






whenever this topic comes up for discussion. Yes, nature's rule book of






survival prioritizes those who are the fittest and most adaptive…but not







necessarily for being the largest.










Fiscally Fit












Machiavelli put it best when he stated “During times of plenty, a Prince






prepares for war.” This is the metric I use to evaluate the leadership of publicly traded companies. Great leaders have learned the im






portance of building their war chest during times of plenty, so that they





can be in dominant positions to take advantage when leaner periods







inevitably arrive. Doing so serves two distinctive purposes. First of all,






it fortifies their companies from being dependent upon banking institu






tions when demand for their products or services decreases, and





secondly, it provides them with the capital required to purchase succ






essful, but ill-prepared rivals (at the pricing of their choosing) during






prolonged periods of economic slowdowns. This fiscally fit objective






is a good indicator of companies that will not only survive during diff






icult financial situations, but will actually thrive within this environment.






As such, these names are likely to endure even the harshest if econom






ic conditions, and should therefore, hold standardized positions within





your investment portfolio.






Winning Adaptation








Another way of identifying companies which will endure during difficult










situations, is to evaluate how they adapt to their own success. One mis






take that larger entities tend to make, is to rest on their laurels when it's






assumed that they've cornered the market on their sectors' offerings.






Short-sighted leadership causes such companies to fail to continue to






innovate, which makes them ripe targets for aggressive upstarts (whom






they consistently ignore) while basking in the luxury of their positional






prominence. Interestingly, most of these companies are actually aware






of the newcomers, but because of their arrogance, refuse to take them





seriously until they've established a solid foothold. But by then, unfortu





nately, (or, according to nature, fortunately) inertia propels their new





(and now serious) rival to the point where they are either weakened, or





eventually replaced. When deciding which companies to add to your






portfolio, always pay attention to what dominant candidates are spend





ing on R&D (Research and Development), as it is a clear indicator of its





overall vision. In order to increase shareholder value and diversify their holdings it is important to see if they are looking to expand into other





types. As I mentioned earlier, being the largest is





distinctively different than being either the fittest or the most adaptive.





Which is why nature hold very little regard towards it being placed as





one of her primary tenets of survival.





When the dust settled on our planet, after the cataclysmic series of





maelstroms which wiped out the dinosaurs, 95% of all previous life had









been eradicated, and the prospect of it ever returning seemed nothing






more than a diminishing hope amidst the toxic, visible haze which en






compassed the once-lush landscape. It appeared, during this ultimate






test of survival, that only microbial life would ever occupy the Earth, and





that complex life forms had had their day, and would never again roam





wild and free, as thay did so previously.





Yet, even then, nature's rules of survival proved resilient, as our mamma





llian ancestors used their intelligence, and skills of adaptation, to









forage an existence which would ultimately culminate in the develop






ment of stone-aged tools, the printing press, and today, artificial inte






lligence. The incredible benefits of being fittest and






adaptive have stood up to the test of time. And if properly





incorporated within your investment strategies, will certainly ensure






that your portfolio will do the same.





(Anthony






Rhodes is the President and owner of wealth management








firm The Planning Perspective www.theplanningperspective.com)
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