The Path of Least Resistance
Wikipedia defines “the path of least resistance” as the physical or metaphorical pathway that provides the least resistance to forward motion. This can also be used to describe certain human behaviors and is often used as a metaphor for avoiding personal effort or confrontation.
We see this every day. For example, in the criminal justice system it can be called “plea bargaining”. In the schools it often takes the form of “social promotion”. In many group activities it is “going along to get along”.
For investors, it can be many things, such as a management team that is resting on it’s laurels and not making the tough decisions and investments to generate future growth. It can also be a management that caves to an aggressive investor or special interest group with objectives that may not be consistent with the best interests of the majority of shareholders.
The path of least resistance is not necessarily bad, or good, but bears understanding and assessment, particularly when making investment decisions.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA