In a practically unprecedented debacle, the New York Mets got bumped from participating in the playoffs this year, despite a substantial lead. Sound like any companies you know?
The baseball team was perched at the top of its division in mid-September, seven games ahead of its nearest rival. Everything was going right for the Mets. The team had the talent and the payroll to take it to the next level. The typically jaded sports-reporting town of New York City feared that its beloved Yankees, rather than the typically less favored Mets, would be coming up short in the city's pursuit of another subway series.
Then it happened. Despite all their advantages, the Mets came undone. The final blow came from the lowly Florida Marlins, dead last in the same division, and with one of the lowest payrolls in baseball. The Marlins took two of the Mets' final three games, effectively ending the Mets' season when Philadelphia snuck in for the postseason slot.
Even if you're not a fan of baseball, the Mets collapse can still make you a better investor. Here are a few other presumed champions who've come unglued.
The PlayStation 2 was the industry standard, with several times the installed user base of the Xbox and Nintendo Gamecube combined. Everyone assumed that the PS3 would do equally well in the next leg of the game-console relay race.
Butterfingers! Sony slipped. It delayed the release of its system, giving Xbox 360 an entire year to win over diehard gamers. It then insisted on loading its gaming console with a pricy Blu-ray disc player, hiking its cost considerably. This came just as Nintendo's Wii was turning heads as the hit of the 2006 holiday season, with its infectious controller and group-geared gameplay.
The season's not over for Sony, but it'll be hard for the company to win back its gold after settling for the bronze.
The DVR (digital video recorder) pioneer came up with the better mousetrap. Instead of clunky videocassette recorders, TiVo offered a hard-drive-based system. Its always-on recording gave couch potatoes the ability to pause live television and rewind back to see something worth a repeat viewing.
Despite its briefcase of patents, TiVo was hit by an onslaught of cheaper copycats. Cable and satellite television providers began bundling their subscriptions with knockoff DVRs. With TiVo subsidizing hardware sales in hopes of making up those expenses in subscription revenue, the company became a profitless performer.
TiVo's still got a shot. I wouldn't be an investor if I didn't believe that. However, there's a reason why TiVo has been trading in the single digits for more than three years now.
The 1996 introduction of the PalmPilot ushered in the PDA (personal digital assistant) era. But while the company's product line has evolved, Palm has never been able to combat the popularity of Research in Motion's
The first BlackBerry came out three years after Palm's PDA debut, leaving Palm chasing a rival it should have been leading all along. With Apple's
Thirteen years ago, a pair of Stanford grad students came up with the website that would come to define the search engine space. The company even acquired Overture several years later, making it an early mover in the lucrative area of paid search.
That wasn't enough. The same Google
The apprentice really did outshine the master, with Google's $180 billion market cap towering over Yahoo!'s $36 billion price tag.
As good as it Mets
The investing lesson? Don't get cocky. Whether it's Sony with video game consoles, Yahoo! with search, Palm with PDAs, or TiVo with DVRs, moats always seem thicker than they actually are.
As a member of the Motley Fool Rule Breakers newsletter team of analysts, I'm always on the lookout for disruptive technologies. Some of the best picks out of the growth stock service have been in companies that reinvented their industries, sending those on the throne tumbling down. You can profit from the fall by shorting the eventually obsolete titan, though I prefer banking on the disruptor.
So why scratch your heads over what happened to the Mets yesterday? It's perfectly logical. The Mets may have been perched on top for months, but until the team was mathematically in the playoffs, there was always a chance that it would squander that lead.
It happens all the time. And for those who believe in the slipping leaders, it'll never fail to break your heart.