RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:I posted the below on this board on march 3, 2018Ya what I always tell people, you need to know the difference between speculating and investing. Know when your doing either one and never lie to yourself. Speculating is the art of thinking someone will pay more for whatever reason (even because earnings go up). Investing is not caring about the price (after you buy in!) and determining your return based on the fundamental owner earnings and the initial price you paid. IMO value investing into low priced stocks and flipping them is speculating, but if you buy a low priced stock and it gets to fair value, why not sell right? If you’re lucky the convergence happens quick and you can do it over and over again. But that’s the speculative part. No one knows how long that will take.
This was clearly a speculative investment because the fundamentals suck and you have to look to the balance sheet and use a price to revenue valuation. That is the classic cigar butt strategy. You can make a lot of money doing that. But often it’s not advisable to hold onto investments in that category unless you have some thesis of long term earning power. I do not in this case. I just bought the thing because it was basically free. I have no idea if the price will keep going up because it’s largely speculative and not based on a thesis. It’s not in my circle of competence. I’m not an expert in Ferrari’s, but with a little research and a mechanic I could probably figure out if a 2002 360 was a good deal at $10k or overpriced at $1M. If I bought it for 10k and someone offered me 100k for it, I would probably sell it.
So I can’t tell you if this is a good investment here. But it doesn’t look like a good speculation. At least not based on the numbers and my circle of competence.
GLTA