GREY:ATBPF - Post by User
Post by
MrMugsyon Jun 12, 2022 9:03pm
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Post# 34750647
How to avoid financial decapitation ...
How to avoid financial decapitation ...I'd love to answer the question about how to avoid financial decapitation.
First - you have to understand what you are buying. You invest in the company - not the stock price. You are looking to buy value when you are buying early stage growth companies. You definately are not buying a business that can be valued by share price - OR - by revenue growth at every point in their timeline. Some don't have revenue until way later.
That leads us to the 2nd point ...
With growth companies, you have to show patience. Rome wasn't build in a day and no complex growth company was/will be either.
3nd - you have to believe in the leadership ... else ... you are taking needless risk. I will not invest in companies where I can not speak with management. And I won't invest until I've had good discussions to help me understand.
It's ideal when leadership has a proven track record. That makes it easier to understand and to follow.
I have seen good technology go to pot because of poor leaders.
Then I have also witnessed good leaders resuscitate good technology out of bankruptcy and offer it to their shareholders before being acquired.
It's a site to behold - and - I'm actually investing in that same CEO for another NASDAQ listing and his third attempt at growth towards being acquired. Remember, it takes time to get to greatness. Make sure you are planning for that (when it comes to early stage growth).
4th, knowing it can take a long time with growth companies, you have to have a game plan that considers the time factor. In most cases it's about accumulation over the long term. That's very much the story of the tortouse and the hare and you know how that one plays out. While you are slowly accumulationg, you are also heavily evaluating. Is this the right place for my money ?
Again - share acquisition is useless if you don't have good leadership and it's a waste of time if you don't understand the business and how to evaluate it. Without patience, you can't put a good accumulation plan together. See how it all fits together ?
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There is nothing simple about early stage growth. You have to smell problems early and you have to be prepared to exit quickly. In the meantime, you are in accumulation mode, all-the-while evaluating the company and the plan - deciding if you still agree.
It's a tough job but I simply love it !!!
If you're a whiner and all you do is complain about this company - then I'm not sure you have a game plan. I'm not convinced you know how to deal with growth companies. Anyway - just my thoughts - just my opinions.
Hope that helps .