Why ‘Perfect’ Companies Underperform | InvestorPlace
AI is rewriting the rules – and exposing a dangerous blind spot for investors…
Editor’s Note: Every market cycle creates its winners. But the biggest gains don’t come from chasing what’s already working – they come from spotting what’s working before everyone else does.
That’s getting harder in the age of AI, where headlines and hype often distract from what’s really driving the next wave of winners.
Market veteran Josh Baylin has spent his career tracking that hidden layer – from hedge funds to the tech sector itself – analyzing how software adoption spreads and where real momentum is building beneath the surface.
In the essay below, Josh explains why “perfect” technologies are often closest to becoming obsolete – and how to identify what’s replacing them early.
This is the foundation of his Shadow Data Indicator (SDI), a rules-based system designed to uncover high-potential tech stocks before they surge. You can read his full breakdown below – and watch his free presentation for a deeper look at the system he’s using to track what comes next.
In 2007, BlackBerry achieved perfection.
For a phone, its keyboard was flawless. Email synced instantly. The battery stayed charged for days. Even IT departments loved it.
The media dubbed it the “CrackBerry” because users couldn’t put it down.
BlackBerry Ltd. (BB) stock reflected the mania – soaring from below $10 in the early 2000s to more than $140 just a year after the iPhone launched in 2007.
Two years later, it was back to being almost worthless.
BlackBerry didn’t fail because it got worse at email…
It failed because “mobile email” stopped being the right problem to solve. The iPhone didn’t make a better BlackBerry – it made BlackBerry’s entire purpose obsolete.
And this same pattern happens all the time… like today with artificial intelligence.
I’ll explain how you can learn to spot it… and a simple two-step test to help you determine which investments are worth keeping, and which are on their way out.
The Problem With the ‘Perfect Tool’
If you can spot when a tool, company, or industry hits peak functionality, you can see its obituary coming – and position your portfolio before the crowd catches on.
Here’s the blueprint I’ve seen repeated across industries for two decades…
Peak functionality is a “Sell” signal, not a “Buy” signal.
When a tool perfectly solves yesterday’s problem, that means it’s probably about to become irrelevant.
You can see this just by looking around at the tools you use at home, in the office, or on the go…
- The Roomba perfected robotic vacuuming. Meanwhile, the company that makes it – iRobot Corp. (IRBT) – filed for bankruptcy in December 2025.
- Monday.com Ltd. (MNDY) mastered project-management dashboards. Yet the company didn’t participate in much of the market rally last year and is down nearly 80% since its high in February 2025.
- Zoom Communications Inc. (ZM) became flawless at video calls. Today, investors have largely moved on.
Each one became a BlackBerry – they perfected the wrong thing.
The AI Inversion Is Industry-Wide
Every collapse of a “perfect” tool follows the same pattern:
- A system reaches peak functionality.
- A new invention makes the old system obsolete.
- Early movers build for the new purpose… while incumbents polish up the old.
When a product gets too good at solving the wrong problem, it makes itself irrelevant. The world simply moves on.
Today, we’ve moved on to AI. As a result, this pattern is unfolding across several industries right now…
- Interface inversion: Apple Inc. (AAPL) has perfected the iPhone – the cameras, the chips, the ecosystem. But voice-first AI doesn’t make a better iPhone… It makes the iPhone unnecessary. That’s likely one reason Berkshire Hathaway Inc. (BRK-B) has reduced its stake in Apple by more than 70% since late 2023.
- Education inversion: Universities have perfected the student experience – beautiful campuses, refined classes, and prestigious degrees. But they perfected the wrong thing: packaging image instead of delivering outcomes. When an AI tutor that costs roughly $50 is on its way to outperforming a $50,000 education, the entire system inverts.
- Transportation inversion: Cars have never been safer, more comfortable, or more feature-rich. But the inversion here will eliminate driving and its inconveniences entirely. And as higher insurance costs gradually make driving too expensive, AI-enabled self-driving cars will continue to gain traction.
So how do you protect your portfolio?
How to Position Your Portfolio for AI Disruption
Right now, the market is full of big promises. That includes new companies promising the next big thing… and old companies trying to hold on to their place at the top.
In the age of AI disruptions, you need to know how to tell the difference…
Apply what I call the BlackBerry test:
Is this company perfecting the old purpose – or preparing for the new one?
Once you’ve applied this simple test, here’s what to do next:
- Sell the companies still adding bells and whistles to already “perfected” tools – whether it’s dashboards, project managers, or consumer apps.
- Buy the companies removing entire layers of friction – making the old problems irrelevant.
Think of it this way: Perfection is a trap. It signals the end of usefulness, not the beginning of growth.
For everyday investors, that knowledge is your edge.
The next BlackBerry is always hiding in plain sight — behind a product so polished it blinds investors to what’s coming next.
The key isn’t avoiding change. It’s learning how to spot it early – and acting before the market catches on.
In my recent Market Tremors 2026 presentation, I walk through exactly how I do that using my Shadow Data Indicator (SDI)… including how it identifies companies gaining traction before Wall Street fully recognizes it.
I also share a current opportunity that fits this pattern right now.
You can watch the full presentation here and see how the system works.
