Value investing, when confronted by technological disruption, is less a matter of clinging to old rules and more about constant recalibration. We’re living in an era where the pace and scale of change can make even the most staid businesses look fragile overnight. As a value investor, my starting point is almost always the gap between perception and reality. The market tends to swing hard on sentiment—often overshooting when it comes to companies seen as “dinosaurs” in a digital or automated world. But somewhere in that emotional churn, genuine opportunity, and significant risks, wait to be teased out.

Let’s face it: technological shifts are nothing new. I often think back to stories of investors dismissing railroads for the automobile, or later, ignoring traditional retailers as e-commerce took hold. Every so-called “revolution” triggers a stampede for the exits in established industries, sometimes with good reason. But let’s ask ourselves—how many of those exits turned out to be premature? The answer isn’t simple, and that’s the challenge: separating the Kodak moments from the IBM rebounds.

“If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes.” — Warren Buffett

When the headlines are full of warnings about disruption, it’s tempting to lump all legacy businesses into the “doomed” bucket. But what happens if we look deeper? My approach begins with a question: is the company experiencing a temporary earnings dip, or have the core economics shifted for good? That distinction matters more than anything. Short-term pain doesn’t necessarily mean permanent damage. Consider how many financial institutions weathered the shift to online banking by investing early and staying nimble. The ones who clung to old systems, hoping the change would pass, often lost ground. But those that paired legacy strengths—like trusted brands and sticky customer bases—with aggressive digital reinvestment, found ways to thrive.

A lot rides on management’s response. Are leaders acknowledging the threat, or are they retreating into denial? I remember reviewing earnings calls where executives insisted “the fundamentals haven’t changed,” only to see those fundamentals unravel year after year. By contrast, when management clearly articulates not just the challenge but also a credible, measurable plan to adapt—backed by actual investment and tough decisions—I pay closer attention.

And this leads directly to financial capacity. Even the best-laid adaptation plans can be dead on arrival if the balance sheet can’t support them. Assessing liquidity, debt maturities, and access to non-dilutive capital becomes an exercise in realism. Can the company fund both ongoing operations and necessary reinvestment without crippling itself? The classic metrics—current ratio, interest coverage, free cash flow—need a fresh context here. But it’s not just about endurance. I ask: is management prioritizing reinvestment into genuinely transformative technologies, or simply throwing money at legacy systems out of habit or fear?

It’s easy to overlook hidden assets, especially in companies that don’t shout about their digital transformation. But sometimes the most valuable resources aren’t always visible on the balance sheet. Consider proprietary data, patents, or deep customer insight accumulated over decades. A utility might seem stuck in the past, but what about its trove of usage data and longstanding regulatory relationships? A retailer might struggle with foot traffic, but its loyalty program could be the key to unlocking personalized e-commerce growth. These intangible assets can provide the seeds for reinvention—if management recognizes and acts on their potential.

“Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.” — Warren Buffett

Every industry in the midst of disruption fronts a test: can its customers be retained or regained through a new offering? This goes beyond product features and touches on emotional loyalty, trust, and switching costs. If customers are leaving in droves, that’s a red flag. But if a company retains a devoted core, even as it experiments with new models, there’s often a path forward. I look for metrics like churn rates, recurring revenue percentages, and net promoter scores as early indicators. But numbers only tell part of the story—a company’s reputation for reliability or service can buy time, provided that time is used wisely.

Here’s a question I often ask myself: is the company’s position within its ecosystem changing for the better or worse? Disruption doesn’t always mean going it alone. Sometimes survival—and even growth—comes from smart partnerships or leveraging platforms that once looked like threats. Media companies that once feared streaming have found new life licensing content to those very platforms. Industrial suppliers worried about automation have pivoted to serve new niches, often through alliances with technology firms. Competitive threats sometimes become collaborative opportunities.

Of course, the history books are dotted with spectacular failures—examples where investors chased “cheap” stocks in disrupted industries, only to fall into value traps. Think of companies that appeared to be trading at significant discounts only because their business models had no hope of recovering in a changed landscape. These are the cautionary tales. The warning signs often include persistent negative cash flow, shrinking core markets with no reinvestment, and management that refuses to adapt or communicate transparently.

Is there a formula for estimating a company’s sustainable earning power post-disruption? I’d argue it’s equal parts qualitative and quantitative. You can run discounted cash flow models all day, but unless you adjust assumptions for changing industry dynamics and realistic transformation costs, the numbers can mislead. Qualitative analysis—like assessing talent retention, innovation culture, and willingness to cut legacy ties—sometimes matters more.

For those of us who live and breathe value investing, patience is often the most underappreciated strategy. The market rarely rerates a misunderstood company overnight. The process can take years, and along the way, sentiment can swing from irrational pessimism to unjustified hope. I find the best opportunities come when I’m willing to sit with discomfort and contradictory signals, resisting the urge to act on each headline.

“Price is what you pay. Value is what you get.” — Warren Buffett

What does all this mean for practical investing? I keep a watchlist of companies hit hard by technological worries but showing glimmers of adaptive strength. I dig into their financials with a skeptical eye but stay alert for signs of genuine change—be it a shift in capex allocation towards innovation, a new product line gaining traction, or customer sentiment quietly turning positive.

I also ask tough questions of myself: what biases might be coloring my judgment? Am I too quick to write off a business just because it’s unfashionable? Or am I too sentimental about “iconic” brands that have lost their edge? The discipline, I find, comes from reviewing past mistakes as ruthlessly as I study new opportunities. What were the warning signs that I missed last time? Where did I confuse hope for evidence?

If you’re in the trenches of today’s stock market, facing AI automation, new digital platforms, and relentless online competition, these issues matter more than ever. I think about the newspaper industry, where some publishers survived by betting early on digital subscriptions instead of clinging to print ad revenue. Or legacy tech firms that pivoted to cloud services, often leveraging old relationships in surprising ways.

But perhaps what sets the best value investors apart isn’t just analysis, but the willingness to act—decisively—when conviction outweighs consensus. It’s not about predicting the future of every technology, but about understanding which companies are still writing their own stories, rather than merely reacting to someone else’s script.

In closing, let me ask you: how do you distinguish a falling knife from a misunderstood bargain? When you look at companies under siege from technological change, are you seeing a business in freefall or one finding its footing in a new world? The answers, as always, are out there—in the footnotes of financial statements, in offhand comments during Q&As, in the subtle shifts of customer loyalty metrics.

If we can learn to tune out the noise and focus on those signals, that’s when value investing feels less like following a formula and more like an ongoing, thoughtful conversation with the future. And isn’t that what every investor wants—a chance not only to outsmart the market, but to be part of the story that’s still being written?

“The intelligent investor is a realist who sells to optimists and buys from pessimists.” — Benjamin Graham