Last Updated on March 12, 2025
Overview – Knowing How to Avoid the Competition
If you’ve ever been to the gym in the middle of the day, have gone to a popular grocery store during peak hours, or tried to find a parking spot in a busy part of town, then you’re most likely familiar with the experience of dealing with lots of people. Chances are, it wasn’t something you’d consider pleasant.
To deal with the crowds, you’re usually presented with two general options: learn how to deal with and “fight” your way through them, or learn how to avoid them entirely. Focusing on the latter, this could mean showing up at the gym earlier, going to lesser-known grocery stores, or parking further away.
Put another way, you can either choose to compete with others directly or avoid competing altogether. This idea of avoiding the competition or rendering them irrelevant forms the basis of a “Blue Ocean Strategy”.
Investors “compete” with one another all the time by trying to find the best investment opportunities available that will give the most satisfactory returns without overpaying to acquire them. However, by utilizing blue ocean strategies, investors can achieve the success they want without having to worry about everyone else.
What Is a “Blue Ocean Strategy”?
The “Blue Ocean Strategy” is originally a business-related concept, but it is relatively straightforward and can be applied to other fields or endeavours. However, to fully understand it, we will first examine what constitutes a “blue ocean” and, in contrast, a “red ocean.”
Oceans, in the context of our discussion, are simply an analogy for a given business market/space. In highly competitive markets, several companies are constantly vying to obtain the largest market share possible and are always worried about keeping competitors at bay. Because of the constant, fierce competition, there is a lot of “bloodshed” as various companies fight to stay afloat and get ahead, thereby bloodying the waters which creates a “red ocean”.
In a blue ocean, there are very few competitors to deal with, if any. The lack of competition means a business has access to uncontested market space, keeping the ocean clean of any blood. The ocean is kept a pristine blue.
Blue and red oceans aren’t always mutually exclusive. In some cases, blue oceans represent niche markets within pre-established, highly competitive ones. It’s possible for companies operating in a red ocean to “carve out” a blue ocean for themselves, though this is easier said than done.
Therefore, a blue ocean strategy positions a business such that there’s no need to worry about the competition, or better yet, ensures there are no competitors to begin with. This enables them to enter new markets, capture new demand, and bring in abundant revenue uncontestedly.
An example of a company that successfully utilized a blue ocean strategy is Cirque du Soleil. Their unique blend of traditional circus elements combined with the sophistication of theatre allowed them to create a new, uncontested market within the fiercely competitive entertainment space without any notable competitors to challenge them.
A blue ocean strategy, if properly implemented, can enable businesses to achieve their ultimate dream: dominate a market without having to worry about losing market share to competitors.
Blue ocean strategies aren’t just limited to the realm of business: the underlying idea of knowing how to avoid the competition or rendering them irrelevant is something that can be applied in many other endeavours, including investing.
The Problem With Chasing After Popular Investment Opportunities
One of the mistakes some investors make, both new and experienced, is focusing too much on popular investment opportunities. “Opportunities” in this case is broadly defined and covers individual investment instruments (stock, bond, REIT, ETF, etc.), specific industries (tech, finance, commodities), or certain countries.
There’s nothing inherently wrong with trying to follow what’s currently “hot” in the investment world, but because countless other investors will be doing the same the likelihood of finding any undervalued or “hidden gem” investments becomes significantly harder, while the chances of overpaying for or acquiring an artificially inflated investment becomes much higher.
For example, there are millions of investors around the world, from humble retail investors to massive institutional players, who look at the American tech sector every day in search of potential investments. The big names such as NVIDIA, Meta, Alphabet, and Amazon capture lots of attention, but they usually command very high stock prices, are very unlikely to be undervalued, and may even be slightly (or grossly) overvalued due to the outsized attention they grab.
Of course, some investors can hope that these major companies can one day sell at a discount, but given the number of different parties that thoroughly scrutinize these major companies’ financial data the chances of them being significantly undervalued, even temporarily, will be slim.
Many investors continue to make the mistake of believing that just because a certain country, industry, or company garners lots of attention means it’s automatically worth investing in. While this may be true in some cases, attention is no guarantee of investment merit, and may even lead to poor investment decisions being made.
Investors may not compete directly with one another in the same way that businesses do, but rather they “compete” to find the best investment opportunities possible at the most reasonable price and/or offer the most growth potential before others do.
Why Blue Ocean Strategies Matter to Investors, and How They Can Be Applied
Finding excellent investment opportunities that aren’t prohibitively expensive to acquire or potentially overvalued can be challenging. This problem is further compounded if investors limit their search only by looking at popular countries, industries, or individual investment instruments.
Investors who insist on focusing primarily on “hot” investment markets/opportunities may find themselves overpaying at best, or acquiring something highly speculative at worst.
This is where blue ocean strategies come into play. By knowing how to utilize them successfully, investors can find excellent investment opportunities that others may have missed or overlooked without running the risk of overpaying, all while sparing themselves from unnecessary stress or wasted time.
Regardless of what specific blue ocean strategies investors devise, the underlying goal will always be the same: to avoid competing with other investors to find reasonably priced or undervalued/underappreciated investment opportunities.
To help generate some inspiration, let’s go over some example blue ocean strategies.
Going back to our earlier example, instead of focusing solely on the American tech sector, why not look at different American sectors such as energy, life sciences, or financial services? Sure, the tech sector gets a lot of attention, but that doesn’t mean there aren’t any other investment opportunities in other parts of the economy.
This can be taken a step further by looking beyond the US and searching for investment opportunities in other advanced economies such as Canada, the EU, Japan, or South Korea.
Investors who are particularly motivated, knowledgeable, and/or experienced may find the investment landscape in advanced economies to be too competitive and may focus on emerging/frontier economies instead, economies that many investors have traditionally shunned due to being “too risky”.
It’s no exaggeration to say that the types of blue ocean strategies investors can deploy are virtually limitless, and will be limited primarily by an investor’s creativity, knowledge, and skills.
Creating a Blue Ocean Strategy Isn’t Always Easy, but It Doesn’t Have to Be Overly Complicated
After having gone over what blue ocean strategies are, why they’re important, and going over some examples, it’s easy to fall into the trap of thinking they’re easy to come up with, trivial even. However, just because a blue ocean strategy sounds easy in theory doesn’t mean the same will be true in practice.
Anybody can say “Look at other industries for potential investment opportunities”, but this assumes an investor has adequate knowledge of those other industries needed to make informed investment decisions regarding them. Investing in international markets isn’t a groundbreaking new idea, but it requires investors to understand how different countries and their respective financial markets operate.
Most investors can devise creative blue ocean strategies, but that doesn’t mean most of them will have the necessary skills and know-how needed to carry them out effectively. So, creating a blue ocean strategy isn’t as simple as it appears to be.
There is, however, a silver lining: blue ocean strategies don’t need to be overly complicated for them to be effective.
In a previous article, we discussed how overly complicated investment strategies don’t necessarily lead to more success. Likewise, blue ocean strategies don’t need to be over-the-top to produce the results that investors want.
Earlier, we mentioned how businesses that operate in fierce, red ocean environments can create blue oceans for themselves by operating in underappreciated or overlooked niches. Investors can adopt a similar approach when trying to create a blue ocean strategy.
For example, just because a certain sector/industry is highly competitive and draws lots of investor attention doesn’t mean every company in that sector/industry will be on every investor’s radar. Some companies may be operating in relatively unknown niches, and even then there may be minor players in those niches, meaning they aren’t going to be overvalued or overly expensive.
Of course, discovering these overlooked opportunities will still require work on an investor’s part, but they don’t need to do anything overly difficult to discover these potential investment gems. Sometimes, all it takes are small moves or minor pivots to create big impacts.
Wrapping Up
Very few people and businesses willingly compete with others and will, in most cases, find ways to avoid dealing with it. Competition may be pervasive in the world, but that doesn’t mean it’s unavoidable.
Blue ocean strategies are built on the idea of allowing businesses to thrive without having to worry about competition, either because the competition poses a minimal threat or is non-existent to begin with. Fortunately, blue ocean strategies can also be applied to investing.
Investors who know how to utilize blue ocean strategies can increase their chances of finding excellent investment opportunities without having to worry about overpaying or acquiring something speculative. The types of blue ocean strategies investors can deploy are virtually limitless and are limited only by their creativity, skills, and knowledge.
That being said, creating a blue ocean strategy isn’t a trivial affair. Something that sounds good on paper may end up being difficult to implement in practice. However, blue ocean strategies don’t need to be overly complicated for them to be effective.
