Published in the San Diego Union-Tribune, April 8, 2024
by Neil Senturia
During lunch with an old pal, we talked about “opportunity” and how to identify it. Can you see it from afar or only when it is right in front of your nose? Or are you blind as a bat?
Another pal told me a story. He bought Microsoft stock at $12 and sold it at $36. After all, it had tripled. He bought Apple at $13 and sold it at $28. Of course, he tells me that IF he had held on, he would be talking to me from the interior of his G5.
Then he tells me he bought Nvidia at $210, and he is never selling it. What about folks like me who have never bought Nvidia? The fear of missing out, FOMO, is an acute form of regret.
Did you buy a house in Southern California when you could? Look back to 2008-2009, when house prices dropped 35 percent. A steal of a deal. At the same time, the Dow Jones also dropped 56 percent from 14,164 to 6,469.
Jason Zweig, a Wall Street Journal writer, says, “You can’t observe what would have happened on the road not taken.” Are you the guy at the restaurant who orders the salmon, but keeps looking at the steak on the next table?
We all remember the misses, but what about the bullets we dodged. You didn’t buy Pets.com.
It is all about opportunity and how to see it. Here comes the crusher — not only seeing it but acting on it. How many people say I knew that XYZ was going to happen? Remember, they “knew.” And you ask them if they acted on their “knowledge,” and more often than not, the answer is no.
The appearance of opportunity is often random. David “Sandy” Gottesman met Warren Buffet by mistake in 1962. Buffet was supposed to play golf with Gottesman, but when he went to pay for gas in his car, he reached for his wallet and wrenched his back.
Instead of canceling, Buffet went to meet Gottesman for lunch, and they spent the next 60 years together piling up billions. But it was still not obvious.
Their first deal together was the purchase of a company, the department store Hochschild Kohn, that belonged to his wife’s cousin. They bought it, and about a week later they realized as Buffet said, “We had a lemon on our hands.” They ultimately dug their way out, suffering only a modest loss. In the aftermath of the debacle, Gottesman got some Berkshire shares, which since then have risen 400,000 percent.
But pause and remember that their first deal was a dog. How many of us would stay together and do another deal with someone after that experience? Opportunity might have to knock twice.
And what about the “right under your nose syndrome.” I spend time, like all deal guys, looking for opportunities. I would tell you that I know what I am looking for. Sure, I know the mantra about market, team, technology etc., but if it were easy, everyone would do it, and if I were so smart, I would be rich.
But sometimes, if you just look across the room (dorm rooms included), it is staring you in the face. You know those stories.
Two years ago, a guy comes to me and wants to rent a desk in my suite. Sure. And without being asked, he offers to prepay the first six months’ rent. He has been doing that for the past two years. He has three or four screens up all the time with lots of numbers. A few weeks ago, he asks me for some corporate finance advice. After all, I am supposed to be a brilliant consultant, so sure. Off to the white board, the Oracle of Hoo-Hah.
Turns out he is very, very smart, and a month later, I decide to invest in his company. Up until then, our primary interaction was him bringing a latte for me and my assistant. How far did I have to look? About 32 feet. I know there is still a good chance of losing my shirt. But the thing about opportunities is — yes, you guessed it, you have to take them.
Rule No. 801: The saddest words, “It might have been,” the poet John Greenleaf Whittier.