Perfection Is a Sell Signal in the Age of AI
Editor's note: Perfection might seem like the goal for any company. But in investing, it can be a warning sign. As Josh Baylin warns, peak functionality is often the first clue that the world is about to move on. In this issue, originally published last August, Josh explains how to recognize this shift early – and how to spot the next wave of winners and losers...
In 2007, BlackBerry achieved perfection.
For a phone, its 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 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 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.
And this same pattern happens all the time... like today with artificial intelligence ("AI").
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 (IRBT) – filed for bankruptcy in December 2025.
Monday.com (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 last February.
Zoom Communications (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, specifically, we've moved on to AI. As a result, this pattern is unfolding 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. That's likely one reason Berkshire Hathaway (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.
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?
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 fall for this "perfection." Be early to the inversion.
Good investing,
Josh Baylin
Editor's note: The market is changing fast – and Josh says most investors aren't prepared. That's why he just went on camera to reveal the system he has used to identify 442 winning trades since 2017. In his briefing, Josh also explained why his system is signaling a critical turning point... and the one move you need to make immediately to protect and grow your portfolio.
Further Reading
The biggest investment opportunities often begin as bold ideas... and they eventually become possible because of new technology. But by the time the market catches on, most of the gains are gone. That's why investors who recognize these trends early can capture outsized returns.
You don't need complex tools to find new investment ideas. Sometimes, a single event can signal meaningful change. Leadership transitions often signal new strategies and fresh direction – creating setups that investors can't afford to ignore.