Lessons from Declining on Wildly Successful Investments

Reflecting on experiences where investments were declined, and realizing their potential for success, can often provide valuable lessons about decision-making and risk management. This article explores the wisdom gained from such situations and offers insights into how one can improve future investment strategies.

What Have You Learned from Declining on an Investment That Actually Turned Out to Be Wildly Successful?

The journey of an investor is fraught with uncertainty and occasional heartache, especially when the fruits of missed opportunities become apparent. This article delves into the lessons learned from declining on various investment opportunities that later proved to be wildly successful.

Do You Have to Be Lucky to Beat the Market?

The question often arises: is it possible to consistently outperform the market without relying heavily on sheer luck? While luck plays a part in any investment journey, the answers lie in a combination of foresight, risk management, and a deep understanding of the markets and the companies involved.

Startups

BufferBox: A notable example is my initial pass on BufferBox, a company that was eventually acquired by Google. This experience taught me to trust my instincts more and consider less conventional valuations when evaluating startup opportunities.

Other Regrettable Passes: There are several other startups that I passed on, and while they did not become publicly known, they highlight the importance of flexibility and the willingness to re-evaluate decisions.

Public Stocks

ISRG and BRK: I also missed the mark on certain technology companies, including ISRG, which performed exceptionally well. A more memorable regret is my refusal to invest in BRK during the 1990s, despite a friend's advice from Goldman Sachs. This mistake underscored the value of trusting knowledgeable investors.

RIMM and Other Pas: I had multiple chances with RIMM and other stocks suggested by friends, but only took action after a significant period had passed. This further highlights the need to balance patience with decisive action.

Lessons Learned

Learn from Your Mistakes and Move On: The only course of action is to learn from past errors and continue moving forward. Self-suing seems more awkward than beneficial. Focus on Gut Feelings for Startups: In the case of startups, it's crucial to rely more on your intuition and less on traditional valuation metrics. Listen to Key Investor Friends: Certain investors have insights that are worth heeding. It's important to listen to those who consistently demonstrate knowledgeable guidance. Avoid Irresponsible Advice: Refrain from heeding the advice of those who are overly pessimistic or lack a sound understanding of market fundamentals. Hone Your Criteria for Success: For startups, focus on key criteria such as the strength of the CEO, market barriers, and customer development. For public stocks, the focus should be on wide moats and safety margins.

Conclusion

Reflecting on these episodes has provided a wealth of lessons. It has reinforced the importance of continuous learning, adaptability, and a balanced approach to investment decision-making. As the saying goes, “As Coach K might say,” every lesson, no matter how painful, is a step towards becoming a better investor.

Final Thoughts

In the ever-evolving world of investing, the ability to learn from past mistakes and apply those lessons to future decisions is a key factor in achieving sustained success. This journey of reflection and improvement is ongoing, and with each missed opportunity, the chance to learn and grow becomes real.