There is much talk about valuation and the “Death of the Unicorn”. It just proves to me one thing, I am getting old!
I lived and preached the value of the new frontier in the late 90’s, many people scoffed at the “Tech Bubble” of the dotcom era. We then turned our attention to bankers, bashed them and now we are bashing the next wave of technology companies.
Valuation at any point in time is just a reference to what a group of investors think the potential cash flow of a business will be in the future. It can be modelled in a number of ways and we can agree or disagree (by investing or passing) on the number.
Technology investing is not for the faint hearted, if you want something with less risk (and reward) then think about another sector, perhaps something that you know lots about. I don’t know much about anything but I have seen lots of technology and I do really love the “New New Thing”.
So I choose to invest in technology, if I knew more about property I might invest in that, but my public and private investments are very heavily skewed to technology, mainly because it is something I think I know something about.
I am also a realist, things that go up must also come down and historic valuation metrics are no indication of future ones. It takes time for most people to catch up and I continue to see astounding valuations for businesses that have little revenue, let alone future cash flows. This, as my mother used to say – “Will end in tears”. It might not be this year or next, but it will at some point.
I have a philosophy of investing with at least a decade as my view point. I have never managed to “flip” an investment and generally prefer to invest early rather than later. It isn’t a great philosophy if you are a fund manager, but as a private investor I can stick to my investment diet and not worry about what others think.
Realistically the only thing I am learning from all the press about Unicorns (or death of) is that I am really getting old. (Kevin Dorren, Age 47)Tweet