Biorem Inc V.BRM

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[Possibleidiot01]

FYI.
I have no knowledge of Boole Microcap.

Jason BondJason Bond • 3rd+ • 3rd+ Boole Microcap Fund | Boole Microcap Fund Increased by 36.5% in 2022 | Beat the Market | Microcap Investing | Value Investing | Compounding Interest | Build Wealth | Warren BuffettBoole Microcap Fund | Boole Microcap Fund Increased by 36.5% in 2022 | Beat the Market | Microcap Investing | Value Investing | Compounding Interest | Build Wealth | Warren Buffett

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1w • Edited •

1 week ago

 

 

 

“In investing, nothing is certain. The best investments we have ever made, that in retrospect seem like free money, seemed not at all that way when we made them.” – Seth Klarman

You have to be careful of hindsight bias when speaking about past investments.

Hindsight bias: also, called the knew-it-all-along phenomenon, is the tendency to view past events as more predictable than they actually were.

If we predict an event X, and event X ends up happening, we think, ‘I always knew that would happen.’

If we predict an event Y, and event Y does NOT happen, we think, ‘I always knew that was unlikely.’

When you make an investment, you come up with intrinsic value scenarios and a probability for each scenario. Those probability estimates tend to be more accurate than hindsight.

Here’s an example: BIOREM (BRM.V / BIRMF), an engineer of air emissions abatement technologies.

Intrinsic value scenarios:

Low case [20% chance]: If there’s a bear market and/or a recession, the stock could decline. That would be a buying opportunity.

Mid case [60% chance]: BIOREM should have a P/E of at least 10. That would mean the stock is worth $4.80, which is over 125% higher than today's $2.10.

High case [20% chance]: Arguably, the company should have a P/E of 15. That would mean the stock is worth $7.20, which is over 240% higher than today's $2.10.

If the stock goes to $4 or higher, we think, ‘I always knew that would happen.’ But the actual probability of the stock going above $4 was 80% (60% for the mid case scenario and 20% for the high case scenario).

If there’s a bear market and/or a recession and BIOREM stock declines, we think, ‘I always knew it was unlikely that BIOREM stock would increase.’