I have a history of selling early. I do it consistently. It seems to be working.
In the world of investing, there has never been a better time to think for yourself and yet there has never been so little thinking.
Everyday I see examples that make me cringe. I am trying to be a professional investor, but the term ‘professional’ gets bludgeoned by the ones that have the title.
Just yesterday $IBM raised 10 year notes at checking account rates. If you could sell those to your clients, yes…you are a ‘professional’…salesman! IBM is smart for locking down that cheap money, but if you are buying those bonds for yourself or your client, you are not thinking. You are not working for your client. How does your client win here?
$ZNGA a stock that has been in a downtrend for months, crashed after-hours. According to the ‘professionals’ it was a ‘buy’ and or ‘attractive’. I would argue that nobody on this list has done their work .
All that said, ‘the system is broken’ is NOT an excuse if you are an investor in 2012.
In NYC I talked to some very successful and young entrepreneurs that are hiding out in T-Bills and FDIC bank accounts. They want nothing to do with investing. They associate risk with their startup, therefore, the rest of the money can be in cash.
I hear this and I am disappointed but I don’t argue. It’s one less person to compete against in the strategies that I like.
The tools are available for anyone to find a few people, firms and styles that will allow you to manage risk in a better way than cash. Cash is the rage these days, but cash, like leverage is a tool, not a strategy.
It took me years to develop a strategy that I felt comfortable with. I enjoy early stage company investing (almost always a finished product and low valuation) and in the stock market, highly liquid stocks that are moving up and to the right. Many call it momentum investing, I prefer trend investing. When companies are in between, have exceeding my wildest expectations and not liquid – I am on the alert for liquidity.
The other day I sold my Twitter stock. To be honest, I would have sold it at $1 billion, $4 billion and $9 billion …if I could have. Because my shares were not directly owned by me for a good while, I had no control over them. For me, Twitter did not fit into my strategy anymore and I was lucky to have the window to sell. I want to invest in another batch of great entrepreneurs like I did in 2005-2008. Some of them will be the same guys again shortly.
In just 2008 – I invested in Mike Lazerow (Buddy Media), Brett Wilson (Tubemogul), Ben Kartzman (Spongecell), Alan Levy (BlogTalkRadio), John Borthwick (Betaworks), Andrew and Dan (Ticketfly) and Ed Siegel (RentMineOnline) as well as a slew of other great products that I loved and used at low valuations (whose founders I did not know extremely well).
I want to be in the position to do the same thing in 2012 and beyond that I have paid my dues learning up until now.
Cash is the tool today that will allow me to invest in my areas of passion and expertise. We should all be so lucky.