Jacky Fisher, Britain's former First Sea Lord, offers an important lesson for investors.
In 1904, Mr. Fisher scrapped the British Navy's entire fleet and created a new navy comprising all big-gun ships that rendered other naval ships obsolete, wrote Michael Rosen, principal and chief investment officer of Angeles Investment Advisors, Santa Monica, Calif., in a client newsletter.
Mr. Fisher also embraced the idea of switching the ships' source of fuel to oil from coal, controversial because Britain had ample coal but would have to import oil. Yet oil was a more efficient fuel, allowing boilers to be smaller and ships to travel "twice as far at greater speeds," Mr. Rosen added. Fortunately, Winston Churchill, upon becoming First Lord of the Admiralty in 1912, sided with Mr. Fisher. And after World War I showed the efficacy of using oil-powered ships, other nations followed suit.
Investors face a similar crossroads, Mr. Rosen explained in the article. The days of easy stock market returns are over and investors must adopt customized benchmarks, he added. The traditional relative-performance benchmark is a thing of the past.
The question is whether investors will embrace the new technology. "Or perhaps an eccentric like Jacky Fisher will persuade us to challenge our assumptions and see the world in a very different way," Mr. Rosen concluded.