Being an analyst, our job is to analyze one company's corporate strategy and its financial operation, to determine whether it is a good investment and can enhance shareholders' value. We like to drill deep into a company's past in order to understand its present, how this company's business model evolves over time, how the management implement the strategy, what is the company's track record on delivering the results. This is a common practice as to thoroughly dissect one company's organs and look for the hidden diseased cells. But does it mean that this prudent practice can lead to a guaranteed success, or would it lead to a possible failure?
Every coin has two faces, so as every event and every decision you make with your analysis. History may not always repeat itself because the present can learn from the past. A company with crappy track record can manage to turnaround by restructuring, so as a company with good track record can spiral down into disaster if operating in a comfort zone for too long. We may likely be making a mistake if the past is not representative of the present. This also relates to the basis of trust. We build up our trust with specific companies over time, depending on how they deliver what they have promised and how well they manage our expectation. We tend to give more credit for companies which consistently deliver while discredit those which have disappointed us in the past.
When it comes to relationship, is it necessary to open the x-files to look into one's past and failures before deciding whether it is a buy or sell? Every person is curious enough to dig into the details to find out what's wrong with the other person...would it lead to a disappointment or surprise? Even if you do your own due diligence, that may not necessary mean that a complete picture is laying flat in front of you since people tend to lie and self-sympathize. By understanding more may deviate your judgment from your instinct. Should we all have a little faith and confidence in ourselves and focus on the present instead of the past? Or is there a limit on how much you should know before passing the line of knowing too much?