What do we need to know before investing?
I love the story of Amazon, which has a revolutionary business.
If you can invest on a reasonable scale in the early 2000s, according to the current stock price, you will have a long-term retirement. Mainstream media do not fully understand the disruptive industry, we may be misled. But in the whole process of market development, common sense and market intuition are also needed.
In the long run, investing in disruptive businesses focused on the future is a good choice. But investing in disruptive businesses is not for everyone.
Underestimated the mainstream media
Analysts and platforms often complain about large quarterly losses, while dismissing the growing cash flow and customer growth.
There’s a good reason why the investment industry has always thought Warren Buffett is God. His value investing style has stood the test of time. The reason is simple: Warren Buffett follows the rules. His value style investment relies heavily on financial reports to find undervalued stocks.
As an analyst, he has to rely on traditional tools, such as P / E ratio, debt level, profitability, dividend growth, balance sheet, etc. these tools are very useful in evaluating old companies that are no longer in a strong growth stage. Analysts have to rely on these traditional valuation techniques because they actually have nothing else to determine the “fair market value” of the company.
But this is definitely not the case for disruptive companies.
Mr. Buffett’s value based approach to investment largely depends on the maturity of the company and its management in a conservative (or at least consistent) way.
Amazon is notorious for spending a lot of money in some financial quarters or even years, reinvesting it in new markets and new business models. A lot of reinvestment in these periods made financial analysis a mess. Since analysts and investors usually only have a rough idea of how Amazon reinvests during each quarterly reporting period, it is difficult to estimate profitability and revenue growth.
Underestimated the impact of advertising
The media plays an important role as a supervisor in the government and enterprises. Without the media, investors would be defenseless against dishonest executives. However, I think we should maintain a healthy skepticism when using the media. Investors really need to ask themselves, “who does this article really serve?”
Investing in the future
Warren Buffett asked himself in mid-2017, after losing thousands of dollars in energy stocks:
Why should I still invest in the past? Why don’t I start investing in the future?
This is another often overlooked aspect of Warren Buffett’s value investing style, which is actually reflected in disruptive technology investments – his patience and persistence to invest long enough to make money. Value investing requires patience because it can take years for the market to realize that the company is undervalued. This is no different for disruptive technology investment. It takes time for the public to accept new disruptive technologies and integrate them into their lives.
Tesla is going out of business
By 2019, the consensus around the world seems to be that Tesla will soon go bankrupt. Tesla has been plagued by short sellers for a long time, but with the increase of negative news, short selling also intensifies.
Accusations and accusations are frightening, and the prospect of losing so much money is worrying. But there are still some investors continue to buy Tesla, which has finally changed the market bias in the recent boom.
It is no secret that Tesla has invested almost all its profits in expanding its various business areas as soon as possible many years ago. However, analysts, like Amazon, are critical of this extreme growth model.
Jeff Bezos has clearly explained for years that Amazon’s focus is on future growth, not short-term profits or dividends.
Even though Tesla has received all the bad publicity, the satisfaction of Tesla’s customers is hard to ignore. The number of positive reviews created by Tesla owners and the growing number of YouTube channels show that Tesla is not only able to win new customers, but also make customers become advocates of the brand. These fast-growing channels show that Tesla’s early adopters have successfully transformed the public into this new disruptive technology.
Is bitcoin the next disruptive technology investment opportunity?
Bitcoin has always been eye-catching.
1. After bitcoin community was attacked by serious negative comments for the first time, the media began to oppose bitcoin.
2. Although some critics believe that other cryptocurrencies are technically superior to bitcoin, bitcoin has millions of enthusiastic supporters from all over the world.
3. Like all disruptive technologies, bitcoin can hardly be priced at a reasonable price.
Bitcoin is not hype. It is only because of the slow pace of mining that the number of people who want to own bitcoin exceeds the number who want to sell it that the value of bitcoin has increased. In other words, value is entirely driven by scarcity. In the long run, supporters of bitcoin believe that this scarcity will bring serious positive pressure on the price of bitcoin.
4. The government hates bitcoin. Therefore, it does not want the government to reduce the restrictions on power in any way, so it will be hated by the government and general “institutions”.
5. Like almost all disruptive technologies, investors face two almost contradictory risks: first, will the price of bitcoin be as high as bitcoin fans predict, and second, will I have enough time to get enough bitcoin before the price? Can’t afford it?
Therefore, there is only one principle for bitcoin Investment:
Don’t invest more than you are prepared to suffer. 0
Responsible editor; zl