No News Big Smiles MVIS

Someone out there is having an epic; “I told you so” moment. I believe it was back in March when someone on the MVIS Reddit board told me to buy more MVIS stock because it was bound to go up, had to go up, couldn’t go down any further. (Paraphrased because the MVIS board is so busy I couldn’t find that post among the thousands of comments.) I bow to them, but I also have not changed my strategy or tactics. MVIS’ low price was $0.15. Friday it closed at $2.71. If I’d listened to them then, the $1,000 I had to invest would now be worth $18,000. I recognize the missed opportunity, but I also respect my approach to personal finance. Both things can be true.

Screenshot 2020-07-18 at 17.50.16

For more about MVIS, the stock for the company MicroVision, I suggest either drilling into My Semi-Annual Portfolio Exercise, or the MicroVision and MVIS tags in this blog, or both. The discussion boards are even better for a broader collection of perspectives. For the rest of this, I’ll assume you, reader, either already know about the stock or don’t need to know the specifics and are fine with the generalities of independent investing.

Turning $1,000 into $18,000 in less than half a year is frequently considered a good thing. Those discussion boards are suddenly populated by millionaires. I’m not one of them, alas. So it goes. And, congratulations to everyone who can celebrate that wealth.

My investment strategy is to buy stock in small, positively disruptive companies when they are overlooked, hold them for years (or decades in this case), and sell them when they become popular. (aka Long Term Buy and Hold, LTBH. Details in my book, Dream. Invest. Live.) Dream Invest Live coverIt is easy to dismiss startups because so many collapse. That’s why their values can be driven down by market unreasonable pessimism (there’s that $0.15). When there’s unreasonable optimism (aka irrational exuberance), the price can go the other way. I bought my original shares in 1999, lost that data, watched the price spike to something like $500, then bought more as it retreated during the Internet Bubble. That price was $38-ish X 8 (reverse split) ~$304. Optimism!

Over twenty years there have been several rises and falls, each as the highs weren’t as high and the lows were usually lower. Ah, but I was effectively dollar cost averaging, buying a bit more as I could. Because of that, I no longer have to wait for it to reach $304 to break even. My current break even is about a tenth of that. I’m not exactly sure because I’ve held the stock for so long that my brokerage lost some of the records. I have paper copies, but I don’t need to know the exact number – despite the curiosity of many others.

Screenshot 2020-07-18 at 16.46.21

For me, and especially for stocks in small companies, I use three familiar terms but give them my own definitions: gambling, speculating, investing. For me, investing means objectively evaluating a company and its stock based on quantifiable finances and market analyses; e.g. financial reports, etc. Speculating involves educated estimates of the numbers that aren’t available; e.g. realistic market capture, market size, market growth, company revenues, expenses, etc. Gambling is something I’ve done too often; e.g. it’s gotta go up because it can’t go down any further; e.g. about half of all my shares and trades.

Investing hopefully reduces risk. Speculating accepts a bit more risk. Gambling is risk. And gambling can pay off. Eventually someone wins are Roulette, someone wins the PowerBall lottery jackpot.

When I am estimating a value for a company or its stock or both, I use a method that needs a shorter name: Present Value based on Future Revenues Discounted for Risk. If there are no revenues today, there can still be a value in the company if they eventually make money. Amortize the future back to the present. Multiply that present value by the estimated (guessed) likelihood that it will succeed.

For a long time I’ve been convinced that MicroVision’s technology has great potential (future revenues), but have underestimated the risk (the fall from $304 to $0.15).

And yet, even with the timely advice to buy more at $0.15, I didn’t. While that person was epically correct, each of my other almost annual purchases seemed correct, too. Imagine the conversations around each of those purchases, and the people who encouraged me, the people who discouraged me, and the people who got tired of hearing about MVIS (especially the ones who so much that it ruined relationships.) The ones who discouraged me got to say “I told you so” far earlier than the recent ones.

For most small companies, I have a high enough risk tolerance (but no longer a rich enough portfolio) to invest a bit, gamble a bit, and concentrate on speculations. MicroVision, and particularly MicroVision’s management’s communication style, as inspired me to add yet another criteria before spending more money on the stock. There’s sufficient silence and ambiguity from the company that I am holding back until there is significant, positive, quantifiable news.

Recently there’s been significant positive news about the company. At least one consumer bought a Hololens (Microsoft’s main play in the augmented reality market), and took it apart to find a MicroVision subcomponent inside. That is certainly significant and positive. Unfortunately, the news isn’t quantifiable. How many units? Is MicroVision the only supplier? What’s the profit margin on the MicroVision product? When will those revenues be recognized?

Management alludes to several other possibilities. Over the decades they’ve talked about NDAs that keep them from mentioning the details about other HUDs, some for cars, some for people; display units; embedded projectors, LiDAR, sensors, etc. Those are potentially positive and significant too, and even less quantifiable.

But, by my criteria, there’s no news.

Obviously, there are also many smiles.

Despite my desire for significant, positive, quantifiable news, the stock has rapidly risen. Yes, someone found the component in Hololens. Yes, the company avoided delisting the stock. Yes, there have been management changes. Yes, there are rumors of buyouts. Yes, there are far more shares being traded and far more people visiting the discussion boards. If I was in a gambling mode with money I could afford to lose, I might be convinced to buy some. But, I already have enough shares that MVIS is my largest holding, even before the recent rise.

As I recall, at one point I had enough shares that, if the company became worth $1B, my holdings would be worth $1M. Time to retire! Dilution has dramatically decreased my leverage. Partly because of that dilution, I don’t expect the stock to regain $300. My hopes for re-retirement (see My Triple Whammy for details) probably require more than a rise in MVIS.

I find myself in an interesting position. As interest in MVIS has increased during a lack of news but great rumors, several people have told me that I’m not pessimistic enough because they see a house without a foundation, and several people have told me I’m not optimistic enough because I prefer to wait for significant, positive, quantifiable news. Maybe that means I’m in a reasonable position.

Envy is too strong a word. I sincerely am pleased that many people who have recently purchased the stock had profited so well. If I’d been able to take all the money I spent on the stock and purchase it at $0.15, I’d be re-retired. Dollar cost averaging, or accidental acquisition, diminished that possibility; but it also meant that I was in position to benefit any time. Wishes don’t matter. Reality does.

Many focus on the growth from $0.15 to $2.71, for good reason. I also recall lessons learned from four decades of stock ownership. Looking back isn’t as powerful as looking ahead. If I have good reason to suspect that the stock is worth more than $2.71, then I should consider buying it. Averaging more than 10% in a year is better than most investors’ performances. MVIS can meet that goal by being worth more than $3 this time next year.

That’s true for any stock. That’s why I am also evaluating the rest of my portfolio. One of the cheapest risk reduction strategies is diversification. After these recent weeks, MVIS is by far my dominant position. The lack of significant, positive, quantifiable news; and the realization that there are more stocks than just MVIS encourage me to consider alternatives.

The pandemic has upset many lives. (Duh. Massive understatement.) It has meant that my current occupation as a real estate broker on Whidbey Island is keeping me busy, and possibly providing me the funds to begin investing/speculating/gambling again. The race is on. Will MVIS rise faster than my discretionary funds accumulate; or, will either change course as restrictions and economics shift? Interesting times, for sure.

As the title says: No News, but maybe soon; Big Smiles, at least for now, and maybe bigger ones later; Wither and Whether MVIS?

Stay tuned.

About Tom Trimbath

real estate broker / consultant / entrepreneur / writer / photographer / speaker / aerospace engineer / semi-semi-retired More info at: https://trimbathcreative.net/about/ and at my amazon author page: http://www.amazon.com/-/e/B0035XVXAA
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2 Responses to No News Big Smiles MVIS

  1. Gerald E Janofsky says:

    Was it me when I talked to about MVIS worth 88 cents just with the Microsoft contract and the 500 million in carry over losses?

  2. Jerry Janofsky says:

    You do know that Sumit is actively selling th eff company, correct?

    The only quantitative news coming will be buyout price. Will be too late to buy after that.

    On Sat, Jul 18, 2020, 8:59 PM Trimbathcreative’s Blog (Tom Trimbath) wrote:

    > Tom Trimbath posted: “Someone out there is having an epic; “I told you so” > moment. I believe it was back in March when someone on the MVIS Reddit > board told me to buy more MVIS stock because it was bound to go up, had to > go up, couldn’t go down any further. (Paraphrased becaus” >

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