Natural Selection

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Definition of 'Natural Selection'

Natural selection is the process by which organisms that are better adapted to their environment are more likely to survive and reproduce. This process can lead to the evolution of new species and the extinction of others.

In the financial world, natural selection can be seen in the way that businesses compete for customers. Those businesses that are better able to adapt to changing market conditions are more likely to survive and grow, while those that are not are more likely to fail.

For example, in the early days of the internet, many businesses were slow to adopt online sales. These businesses were at a disadvantage compared to those that were quick to embrace the new technology. As a result, many of the early internet businesses failed, while those that were able to adapt quickly thrived.

Natural selection can also be seen in the way that investors choose which stocks to buy. Investors are more likely to invest in companies that are well-managed and have a strong track record of growth. They are less likely to invest in companies that are struggling or that have a history of financial problems.

The process of natural selection is not always fair. Some businesses may be more successful than others simply because they were lucky or because they had access to better resources. However, over time, natural selection tends to favor those businesses that are best adapted to their environment.

In the financial world, natural selection is a powerful force that can shape the evolution of the market. By understanding the process of natural selection, investors can make better decisions about where to invest their money.

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