CONTENTS xiii
20 Staying Ahead of the Curve:
Linking Creative Destruction and Expectations 137
Losing Pride 137
Goldilocks Expectations: Too Cold, Too Hot, Just Right 138
Out with the Old, In with the New 139
The Mind Makes a Promise That the Body Can’t Fill 141
Expectations and Innovation 142
21 Is There a Fly in Your Portfolio? What an Accelerating
Rate of Industry Change Means for Investors 143
Fruit Flies and Futility 143
Speed Trap? 144
Investor Evolution 147
22 All the Right Moves:
How to Balance the Long Term with the Short Term 148
Managing for the Long Term 148
Deep Blue’s Lessons 149
Strategies for Winners 149
Strategy as Simple Rules 151
23 Survival of the Fittest:
Fitness Landscapes and Competitive Advantage 153
A Peek at Another Peak 153
Fitness Landscapes 154
Look Before You Leap? 156
Tools of the Trade-Off 157
24 You’ll Meet a Bad Fate If You Extrapolate:
The Folly of Using Average P/Es 159
Social Versus Security 159
Nonstationarity and Historical P/Es 160
Why the Past May Not Be Prologue 161
Bounded Parameters 163
Unpacking the (Mental) Baggage 164
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