Wayne Gretzky famously said, “I skate to where the puck is going to be, not where it has been.”
In many ways, that single line captures the core philosophy of successful long-term investing. As investors, our job is not simply to analyze today’s financial situation – which reflect the past – but to understand where industries, technologies, and consumer behavior are moving.
Capital grows not by chasing yesterday’s winners but by positioning portfolios for tomorrow’s opportunities.
A classic counterexample is the buggy whip industry. In the late 1800s, investing in companies that manufactured buggy whips or carriage accessories might have seemed prudent. The horse-drawn economy was stable and well-established to say the least, (horses and other 4-legged animals have been used for thousands of years for travel and work-related activities). But when combustion engine and the automobile emerged, it wasn’t just a new product, it was a new system that rendered entire supply chains obsolete. No matter how efficient or profitable a buggy-whip manufacturer was, innovation changed the economic landscape. Investors who “skated to where the puck was” didn’t do well. Those who saw where the puck was going—toward internal combustion engines, assembly-line manufacturing, and mass mobility, capitalized on an enormous opportunity.
This same pattern repeats throughout history. Prior to the rise of the automobile, the railroads were once the “tech sector” of their time—a transformative industry attracting capital, engineering talent, and speculation. Today, while still important, railroads are mature, predictable businesses with limited growth, in other words, the innovation frontier moved on long ago. Telegraph companies gave way to telephones; telephones gave way to mobile devices; mobile devices and smart phones opened the door to cloud computing, artificial intelligence, and advanced semiconductor ecosystems.
Financial statements capture the current state of a company, but strategic positioning determines its trajectory. A balance sheet won’t show you whether a firm is innovating, adapting to new technologies, or expanding into emerging markets.
Financial statements are a lagging indicator of past economic activity but tell nothing about the future.
For example, a retailer heavily investing in e-commerce logistics may look less profitable today because of capital expenditures but may be positioning itself for a decade of digital-first consumer behavior. Conversely, a company with attractive current cash flow but declining market relevance may appear healthy right up until demand falls off a cliff. Understanding these nuances are critical.
Consider Kodak and Blockbuster, at one point they were both leaders in their industries that failed to adapt. Believe it or not, Kodak actually invented the digital camera but resisted cannibalizing its profitable film business. Innovation happened but leadership ignored it, and the rest is history. Blockbuster assumed DVDs and physical rentals would remain dominant; meanwhile, Netflix skated toward streaming long before the technology was mainstream. These companies didn’t just make business errors—they rigidly followed the puck even after it had moved.
Today, investors face similar crossroads. Artificial intelligence, clean energy infrastructure, robotics, modern defense, and cybersecurity represent sectors where innovation is expanding rather than contracting. Companies that are adaptable, technology-forward, and data-driven are not only more resilient but better positioned for long-term compounding.
Investing is ultimately about allocating capital toward the future, not the past. Growth follows innovation, and innovation follows technological change.
As an advisor, my mission is to ensure portfolios are aligned with that direction, skating not to where the puck currently is, but to where it is going.
-Paul R. Rossi, CFA