Danny,
Count .. I can't afford to be wrong.
Therein lies the rub. I have been taught that when you can't afford to be wrong you are not investing, you are gambling. IMO, no one that puts that kind of pressure on their DD can possibly be "rational and open minded", at least not all of the time or even most of the time. The emotions have to take over at times and that has been demonstrated repeatedly on this board by the more than a few folks here who it appears to me are in the same position as you and Chris.
Since you are talking to and about me specifically, show me where I've been irrational or close minded. I am taking a calculated risk. I feel that the IDCC should generate at least $2 a share of recurring revenue from 3G and a multiple of at least 20, so I am willing to risk my capital on them achieving that and probably more.
I try hard not to be overly optimistic. You may recall that I have been an unwavering supporter of Marsala since he began coverage of IDCC and that is not a popular position on this board. He is my personal antidote for over optimism.
At first I thought, good point, Marsala is the most conservative analyst... and then it hit me, he IS an analyst, and therefore by default worthy of respect, even though he put a ludicrous $13 or some such price target on the stock when it was significantly higher, apparently in a snit. There is IDCC ticking off Wall Street. Did that cripple the price? Of course not. Short term, probably hurt. Long term - he has to look at results or continue to look stupid.
If you can't afford to be wrong that means that your analysis must always be right and when it comes to investing that is a VERY tall order. First of all, what you are analyzing is only a partial picture of the given event that has been made public. There is no way you can reduce to numbers how it fits into the overall strategy. Perhaps more importantly, there are a myriad of events taking place at the company at any given time that have not been made public that could easily negate anyone's pro or con conclusions about the past event that has been submitted to microscopic analysis.
No, I don't have to be always right, I just need the price to go up even if I'm wrong about some things, or that I exit before it crashes, which is the reason for my constant analysis.
The most important determinants of a company's success are intangibles .. like "vision", "leadership", "strategic thinking" , "teamwork", "corporate culture", etc. and they defy quantification.
I disagree. I'll take a company with solid tangibles and weak intangibles over the reverse every time.
If you can't afford to be wrong you better start analyzing those factors external to IDCC that could conceivably have a significant impact on the stock price like the Market, the Economy, Iraq war, Iran situation, gas crisis, etc, etc. And here is the real clincher about the dangers of putting yourself in a position where you can't afford to be wrong: unpredictable cataclysmic events that lead to panic selling. What do you think would happen to the stock price if, God forbid, WM dies in a plane crash or is hired away or fraud (ala Enron) is uncovered at IDCC or there is another 9/11? You would be trampled by the institutions before you could push the sell button.
You are 100% correct here. It is a risk I'm taking. I understand it and accept it.
Investing is not an art but it sure isn't a science either. Those who believe that they know how to make it one and are willing to put themselves in a position where they can't afford to be wrong will end up being wrong on a percentage basis that correlates quite well with the losing percentages of gamblers.
Interesting, but I find it hard to believe there is actual research on this. If you are talking about speculators who day trade or play options you are right. If you talk about one who invests disproportionately in one stock and holds it, I would be surprised by those results.
There have been times I've felt IDCC was snowy white and others when it got fairly gray. In fact, a week before the LG license I sold about 30% and bought back the full amount (dollars, not shares) on the open after the announcement. Those addicted to gambling don't take their winnings off the table either. They are not happy unless they are gambling it all at all times.
Did you read what I wrote? I SOLD. I did take money off the table because I could see the risk of not getting a significant 3G license and the expiration of 2G licenses as a potential price killer, so I began my exit and was planning on using the run up from some final good news on the 2G front to sell most of my position. When we got a real 3G license I went back in because I now had convincing evidence that IDCCs 3G patents were going to be monetized. It again had a very positive risk/reward ratio in my estimation.
I stay informed, analyze, and when I see a strongly positive risk/reward ratio I invest all I have. When I see the relative risk rise I begin to pull out. That was the only instance I've sold (other than some short term trades to play the channels) since I bought in 1999, but if I sense that we cannot get further 3G licenses done I will exit too early rather than too late. I can handle missing potential profits much better than losing my capital.
Think about it Frank. At least Chris admitted he is addicted to IDCC and it has caused him from time to time to color his otherwise professional judgment and behaviour.
I do admit I am addicted to IDCC, but with good reason. It is my future. I strive to be conservative in my expectations and to carefully analyze the potential pitfalls. I do occasionally lose my normal politeness when those who do discuss those potential trouble areas are shouted down and ridiculed in an attempt to silence their thoughts. That can compel me to fire back. So I apologize for the barbs I put in about you and your investment style. You are a good man, I just disagree with some of your premises and some of your reasoning. That should be debated without the other stuff.
Frank
