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Seeing old companies like Lehman Brothers, Bear Sterns and even Freddie Mac get pulverized by the continuing downturn economy makes me re-think about the whole notion of investing.  Originally, much of viewpoints on investing were derived from the "Intelligent Investor".  Based on Benjamin Graham's theory of investing, it seems that the only surefire method of understanding when or where to invest your money is to find companies with long histories.  Well, when large legacy companies start biting the dust, that theory becomes nullified to a huge degree.

For myself, I can't imagine now feeling safe in putting my money in any company for long periods.  Within the past few years, I've seen normally long, stable companies eat the dirt.  Places like Circuit City, CompUSA, Levitz, Mervyn's all are dying or have died.  Then you can even talk about Detroit and long standing companies like GM and Ford.  Take another look around and you see the airlines industry, something people in fact need, getting decimated.  Food, too, can't be trusted although it's needed.

If that's the case, how can we count on companies with long histories?  In fact, how can we count on having an economy when you see everything get destroyed around you?

Ironically, it's the new industries that are taking over.  Companies with short histories but are doing innovative things  like Google, Amazon, Solar/Green, Tesla, etc. I think are the real places we need to put our money.  Even Apple (actually Apple is a great bet, but you can nod your head at one person).  Sure, some people are thinking energy like Exxon.  But if the well is drying up, some day there might not be anything for Exxon to shell out.  It might be Energy Innovations or eSolar that are the forerunners for energy because demand is driving the real supply.

Part of me believes that investment means putting money into a cause to let it grow.  Of course, making money is key but how they use that money is equally important.  The housing market demonstrated that they were completely incapable of handling money.

You get older companies that are trapped under a mound of bureaucracy, greed and complacency.  Why did it take GM so long to react before pushing out their first hybrids or shrinking their production of SUVs?  Will Exxon be the same in this sense, waiting until the last possible second to make the big switch from squeezing customers of their dollars before even bothering to think about future energy plans?  Will M$ continue to just copy what other successful products and companies are doing rather than thinking about the future and innovating with all their talented engineers?

Maybe the next round of big hits will come to the food industry after they've squeezed the budget in creating low grade, cheap food that continuously poisons people.  I think there's going to be a revolution there too.

I think the key is that investment should be also driven by innovation.  We've lost that vision and only scramble to put money where we think we can make a quick buck.  We forget that companies are built to improve lives, perform services and create products that are upgrades from older, less efficient models.  But we aren't doing that and I think that's where we're missing the boat.

Even if a company misses their forecast on finances, we shouldn't short them if they're still doing a generally good job.  That's just short sighted punishment.  We can certainly do better and we ought to demand better for ourselves.