Don't Get Caught in the Perfection Trap

In 2007, BlackBerry achieved perfection.

The keyboard was flawless. E-mail synced instantly. The battery stayed charged for days. Even IT departments loved it.

Wall Street called it the "CrackBerry" because executives couldn't put it down.

The stock reflected the mania – soaring from single digits 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 e-mail...

It failed because "mobile e-mail" stopped being the right problem to solve. The iPhone didn't make a better BlackBerry – it made BlackBerry's entire purpose obsolete.

Here's the truth: This same pattern happens again and again. You can learn to spot it. And it's showing up again today... with the rise of artificial intelligence ("AI").

I'll explain everything today. Most importantly, I'll show you how a simple two-step test can show you 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 (IRBT) – has seen its stock languish.

Monday.com (MNDY) mastered project-management dashboards. Yet its shares trade near lows, even as the broader market sits near all-time highs.

Zoom Communications (ZM) became flawless at video calls. Today, investors have largely moved on.

Each one became a BlackBerry – perfect at the wrong thing.

The AI Inversion Is Industry-Wide

Every collapse of a "perfect" tool follows the same pattern:

1. A system reaches peak functionality.
2. A new invention makes the old system's purpose obsolete.

3. Early movers build for the new purpose... while incumbents polish up the old.

That's the key: The real danger isn't when a product struggles. It's when it gets so good at solving the wrong problem that it makes itself irrelevant. The world simply moves on.

Today, specifically, we've moved on to AI. As a result, these inversions are popping up across several industries right now...

• Interface inversion: Apple (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. Top investor Warren Buffett seems to agree, as his investment firm continues to reduce its Apple position.

• Education inversion: Universities have perfected the credential system – beautiful campuses, refined curricula, prestigious degrees. But they perfected the wrong thing: packaging knowledge instead of delivering outcomes. When an AI tutor costing roughly $50 is on its way to outperforming a $50,000 education, the entire credential system inverts.

• Transportation inversion: Cars have never been safer, more comfortable, or more feature-rich. But the inversion isn't about making better cars – it's about eliminating driving entirely. And as higher insurance costs gradually make driving unfeasible, AI-enabled self-driving cars will continue to gain traction.

An Investor's Knowledge Edge

So how do you protect your portfolio?

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?

If they're just polishing up the old features, they're in danger. But if they're eliminating steps entirely, they're prepared for the coming inversion.

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 will always be hiding in plain sight – behind a product so perfect it blinds investors to what comes next. Don't be seduced by perfection. Be early to the inversion.

Good investing,

Josh Baylin

Editor's note: The White House just unleashed what could be the most aggressive economic move in U.S. history... a government-wide mandate that could send AI stocks soaring. Make sure you're positioned before the September 30 deadline by watching this brand-new presentation from our colleague Eric Wade.