The cost of discovery...

when everything tells you that it is not worth to go further...

The cost of discovering something new or exciting is expensive.

The cost is time.

The opportunity to spend time with your kid is special.

Memories are irreplaceable (thou they do decay with age).

If the decision is to spend spare time in looking for interesting new businesses opportunities, the problem is that most of the time

  • the valuation look outrageous.

  • the country is not politically stable.

  • it is outside your circle of competence.

  • the product may become someone’s feature.

  • you may not understand the business model.

  • you may not know how to value the business.

  • the industry behemoth may become their competitors.

  • there are many start-ups within that growing segment.

  • the industry is complex, regulated and strive with potholes.

  • purchasing the business requires jumping through various legal hurdles.

In the past, the natural response is to say skip and move on.

The idea would be something that would be filed in the database and completely forgotten until the news that they had become a multi-bagger or had just been acquired.

For conservative investors, there is often a need to overcome the natural tendency to say no.

Maybe the question to ask is if the business still continue to sound exciting despite all these concerns stated above.

If it still is, the position worth considering may include taking a small testing position (if it is not too troublesome).

There is a few reason why this may be the case.

  • If it starts to look like a ten bagger or a hundred bagger, it may just become significant for you to start paying attention.

  • it means that there is a motivation to continue to monitor the business casually.

  • if it starts to deliver in performance it is often easier to average up.

  • If it becomes zero, it usually do not affect your portfolio

Most business problems can be solve as the business grows bigger.

Always remember, being vested also meant that you are student of that business.

and if the business fails, give yourself a pat on the shoulder as it has been a good lesson learnt.

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