It happens to me that when buying or selling shares of a company I constantly return to the analysis of the decision, especially the days following its execution. I experience a certain insecurity of the path traveled.
Beyond the sensations, the definitions that are born with an investment are the second order consequences that our decision will bring.
coinbase.com
Consider, for example, the purchase of Coinbase shares that I made in February 2022. My analysis was marked by the fact that Coinbase had closed 2021 with 3.4 billion net profit, a base of 89 million customers, bitcoin had hit its highest price in years, everything indicated that the adoption of crypto technology was passing from the plausible to the probable.
However, the investment in Coinbase had a flaw that I failed to detect: the price paid for its shares was too high. So, when the clouds settled in the sky, drops fell, then lightning, hail, the storm was perfect, we didn't have the price defense that works so well on these occasions.
Precisely anticipating the second order consequences is almost impossible, going back to the Coinbase case it was out of the question to foresee the FTX catastrophe. Even so, one of the investor's missions will be to build a system to counteract the negative events that will inevitably attack their investments.
Mine is:
Pay a low price relative to the intrinsic value of the company.
Look for companies with competitive advantages.
Look for companies with managers who have proven their performance.
Maintain the investment perimeter within countries with solid liberal democracies.
Constantly reviewing the reason for my decisions forces me to update the investment when circumstances change. It is also the way to measure how much precision there is in my reasoning.
