Thread by @RamBhupatiraju

Long Thread about a specific suggestion I would give to young DIY investors that are business focused, longterm oriented & can handle volatility.

cc'ing for addt'l comments.@TMFInnovator @TMFJMo @Gautam__Baid @David_Kretzmann @Matt_Cochrane7 @FromValue @saxena_puru @BrianFeroldi

If you like everything about the Company, and the only thing stopping you from buying is you think "It's overvalued, & I'll buy if it falls X%".

**For God's sake, buy a small amount-1/4th or 1/3rd**, of the overall pos size you would have bought at your dream/perfect valuation).

I first came across these Co's in Summer of 2016 - $SHOP ($36), $VEEV ($37) and $PAYC ($45) and did most of the initial (good enough for individual investor) research in the same quarter.

(Co's listed are just some examples from my recent experience, not recommendations)

Then fell into the trap of looking backwards at their much lower Jan/Feb 2016 valuations and hoping for a similar drop so that I can buy in. Those drops never came and I finally bought 2 years later into each of them at much higher valuations (missing 100s of % in gains).

After buying a little, you can always continue your research and add/hold/sell over med-long term, based on the business results and your understanding/conviction levels.

Don't waste years upon years by sitting on sidelines for the Companies you understand, like and believe for the long-term , waiting for a big drop in valuation. Individual investors are not mandated like Professionals who have more of Valuation/Size/Sector or other limitations.

However Your Quality filter (for the actual Business) should be really high for this, and a clear understanding of this company on what makes it so special.

Having a lower hurdle for Quality will cause you to end up with a bunch of poor/mediocre and also over-valued companies.

What I mean by understanding the Company and liking it

-Understand Co's Product/Services & their Customer value Proposition, good idea about the trends they're riding, & competition within.

-Like Mgmt (pref Founder) and their vision/strategy for the Co & their execution so far.

-Safe Financial position (Balance Sheet wise) and can understand/correlate the Income statement and Cash Flow statement in light of their Business model and current phase of the company and their opportunities.

-See signs of a current or developing moat and this company's strengthening position in it's Ecosystem/Value chain.

-You clearly understand that both the company and the strong/sustainable trend it's riding are still in early enough stages.

-This could even work for small/well managed companies in big/slow/stable sectors that the Company (with smart Mgmt/Strategy/Capital allocation skills) can capture more of and grow into.

-You have better upside especially if the Company is under ~10B range (in current US Market terms) , and Market is not necessarily euphoric overall or for this sector.

It's not like you're betting the farm on this one company.

By buying a small position into exceptional Co's like these (in a decently diversified Portfolio), you're adding some optionality into your overall portfolio and learning more about the businesses at the edge of innovation/disruption and/or smart capital allocation.

Finally my cheat-sheet for these types of scenarios. 👇

I've come to realize that Investing is not a series of perfect decisions/timing (clearly not achievable), it's more about observation, constant learning, flexibility and evolution to help meet your long-term goals.

/THE END 🙏