Every Company Is Flawed

We learn more and more and more about a company. And yet we are only OPMI. An acronym that stands for Outside Passive Minority Investor. In other words, a person who is not an employee of the company, has invested passively and holds a minority stake without an active say, i.e. has no controlling vote. 

No matter how hard we try, we investors will never be insiders. In other words, we will never know and feel as much as a person who is inside the company. However, this does not necessarily have to be a disadvantage. 

Anyone who invests based on fundamental company data craves information. Management quality, balance sheet, free cash flow, margins, sales growth, competitive advantages and total addressable market are just a few of the keywords in the thirst for knowledge about the business model.  

Those who invest more time, energy and money into this process often achieve better results over the years. Knowledge advantage leads to performance advantage. But not always. Because other variables are just as important. How concentrated is the portfolio, how good is the risk management, how stable are the assets under management? The in-depth research process can also be dangerous if it leads to commitment and consistency bias, i.e. if you stick to a decision you made earlier.  After all, you already put in so much work.

The pain of a missed opportunity

Ultimately, you must never forget that nobody knows the future. There are always stories of long-time employees at the world's most successful companies who nevertheless sold their share options or left the company right before a breakthrough. You can find examples at top names such as Apple, Amazon and NVIDIA. However, they only share these stories if the pain of having missed the opportunity does not permanently seal their lips. 

Anyone listening to these people - some of whom work in management - in the increasingly popular expert networks would have been less optimistic about one business model or another, perhaps not invested at all or would have sold too early. At the end of the day, every company is flawed. Success is still possible because some just handle the flaws better than others. 

There is not one path to success, when it comes to investing. One needs to find a personal route that suits one’s individual abilities and aligns with one’s temperament.