Subscriber Only: Time and Perspective
Let me set the scene.
It’s late 1995, on a brutally cold California winter’s day. Despite dipping into the high 60s’, I’m sitting with my best friend on the front porch of his small Menlo Park bungalow.
“Do you think I should take the job,” he asks.
The job in question is with a formerly hot tech upstart, which, as is the eventual fate of most hot tech upstarts, had grown into a large, mature, no longer exciting version of your parent’s tech company.
The next General Electric, Hewlett-Packard, or god forbid, IBM.
Allied against the opportunity with this aging dinosaur was an offer from a startup.
A young company with a buzz about it, that had yet to reach its “hockey stick” growth phase.
At the time, if you pulled a chart up of the dinosaur you would have seen a stock that spent the previous year flatlining.
But zoom out to a different timeframe and we see a stock that has spent the past half-decade on a tear, gaining over 1000%.
And that was the deciding factor.
“It’s all about equity, right?” I said.
“Yep,” he replied. “Salaries, benefits, everything else is the same. It’s the equity, how much upside there is, and how fast my options will be in the money.”
“I mean, their stock has gone on a monster run over the last five years,” I said. “It could be a long time before they have more upside.”
“Yeah,” he said, nodding in agreement, “and I don’t want to wait too long.”
So he went with the hot new start-up.
Recently, after META released earnings and their stock tanked, as often happens in these situations, a battle raged across FinTwit about the future of the company.
These two conjoined tweets pretty much summed up how it went.
META closed this week just south of $91, so as of now, it looks like PotterStocks will be right.
But if META goes on to hit his $80 target, does that mean that Userofintellect is wrong?
If he/him - as the pronoun in his Twitter profile clearly states - is a short-term trader, then he is already wrong, and hopefully out of any META position.
However, what if he has a different perspective on the company based on a longer time frame?
Because that’s all times frames are - different perspectives.
In that case, he could still be proven right.
For those who haven’t guessed already, the “dinosaur” company my buddy was considering was Microsoft. And as you can see from the chart above, their stock spent the next five years going on another 1000% run.
It’s all about timeframe and perspective.
And making sure they match the investment you’re making.
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