Lessons With LTBH Via MVIS

A stock goes up over fifty percent in a week, and people get curious about it. Why? What happened? Should I do anything about it? Well, I’m not a certified or professional financial advisor so I won’t answer what you should do about that. I can, however, mention what I did about it. And in that there are lessons both arithmetically positive and negative. MicroVision’s stock went up more than 54% this week, on almost no news. That was good and bad and odd.

Google Finance

For a synopsis of MicroVision and their stock, MVIS, pardon me as I copy from my own stock synopses posted as part of my semi-annual portfolio exercise, which will be updated at the end of this month. It may be necessary to drill through links in that post for the most details. For far more details, this blog has two tags for that. MicroVision MVIS

MicroVision is a company based on the technology of oscillating mirror(s) on chip(s). Bounce light one way, and create a projector and display. Bounce light the opposite way, and create a sensor or a camera. Bounce light both ways and people can interact with the projected image. The advantage of MicroVision’s tech is the ability to create devices that are small, use less power than some competitors, and project images that are always in focus. Their projectors aren’t as small as embedded cameras, but they are closer to those camera’s size than to conventional projectors.

That explains one four-letter acronym in the title, MVIS.

The other four-letter acronym is LTBH, Long Term Buy and Hold, an investing strategy that I’ve used for decades (inspired by Peter Lynch’s books). That and frugal living (similar to Your Money or Your Life, and I’m in the second edition) and some good luck allowed me to retire at 38, which led to my book (Dream. Invest. Live., written by request), which led to this blog.

Hi, this is all part of a very long story.

Long is the key word.

The idea of Long Term Buy and Hold is to buy stocks and hold them for a long time. Duh. At least the way I do it, it is a strategy that does not expect to optimize financial performance. It does, however, allow me to better optimize my time. Day traders can concentrate on every bobble in a stock price. Short term investors may only have to check in every few days, especially around news events or financial reports. Some long term investors may only check in a few times a year to see if the company is proceeding, though they may have no intent to trade. They do get to spend a lot more time and many other things, like living.

Regular readers and folks who’ve known me for a several years know the strategy failed me due to what some financial professionals called “a perfect storm of bad luck” and what I call My Triple Whammy.

Folks who’ve known me for decades saw the strategy work better than most.

LTBH is not a panacea. No strategy is. I’ve seen the good and the bad. This week in MVIS pointed out a key reasons I continue to follow the strategy.

Ideally, investing would be logical, factual, and methodical. Humans are involved so there goes that assumption. Investing can seem mysterious, capricious, and ridiculous. Ah, humans.

If investing was that logical and fair, everyone would get the same information at the same time and have the same opportunity to buy or sell. Even then, professionals could trade sooner because that is their job. Individual investors who could only trade when they got home from work, or when they had a day off would be at a disadvantage. One solution is to buy before the news is released. That could be days, weeks, months, years, or decades early.

I regularly read; something that is becoming less fashionable. I’m also a geek, so I am more likely to read dull science-y stuff. I try to be open-minded, so I am drawn to inventions and discoveries. As I find intriguing ideas I write them down. When I have the time and the money to consider investing, I find companies working on those ideas in positive and hopefully profitable ways. Buy. Hold. Read. Listen. Wait. Repeat if necessary. Sell if the risk gets to be too great for the possible reward.

I bought 500 shares of MVIS in 2000 at a price of about $38. The stock spiked (Yay!) and then the Internet Bubble popped (oy.) But, I wasn’t deterred, much. The company was showing off a pair of glasses that could display a television image without obscuring the viewer’s view. There were expectations that they would be profitable within a few years. Cool. I’d seen market corrections before. It would come back. I’d seen innovations people laughed at that succeeded. At that point I already had a history with AOL, AAPL, and several others.

Google Finance

Fast forward to this week. Those early shares and prices need to be adjusted by a one-for-eight reverse split. (500/8 = 62.5 shares, $38×8 = $304) Today’s price is ~$4, a 98.7% loss.

So much for long term buy and hold. Earlier it was worse. The low for the year was $0.15. ($0.15/$304 = too sad a loss for me to want to calculate. Call it 100% and be close enough.)

Google Finance

This week’s stock move was a surprise. There was no new news. There was old news about possible products and possible buyouts, but not news released by the company that was positive, significant, and quantifiable. Waiting for the news would mean continuing to wait.

So, why did it move? Humans. Either, humans are speculating that good news is due any day now, a situation that has also been considered likely for years. Or, someone has heard the news before they’re supposed to know it or supposed to be able to act on it – but that would be possibly felonious and that would never happen. Right? Humans.

The recent move still is significant for me because I continued to buy the stock. As long as the story was sufficiently encouraging and as resources allowed, I continued to buy. I’ve made over two dozen purchases since that first one. My purchases haven’t been as methodical as some, more random; but I made purchases in 2000, 2002, 2003, 2004, 2009, 2010, 2013, 2014, 2015, 2017, and 2018. And yes, I missed the bottom this year (and wrote about it here – No News Big Smiles MVIS.

The majority of those purchases are now profitable. Some have even had a reasonable return on investment (ROI). The significant losses from those earliest ones will be harder to recover from.

Time is the powerful tool, but it works for and against the long-term investor. Buy early and beat the rush. Someone probably bought their first shares of their first investment by buying MVIS at $0.15 within the last year. Buy too early, like me, and the compound interest necessary to produce a reasonable ROI means the money for those early shares should’ve been put in something else, like a no-load index fund. Waiting while holding shares of a startup can also mean dilution (A Study In Dilution MVIS). Despite continuing to buy shares, the company issued so many more that my participation in its success is greatly diminished. Originally, if MVIS became a $1B company I would have become a millionaire. Currently, if MVIS becomes a $1B company, my holdings will be worth about a year’s frugal living expenses. Nice, but not as NICE as it would’ve been.

I hesitated to write this post because MVIS’ great recent performance has yet to be tied to positive, significant, quantifiable news. Currently, MicroVision’s technology has made impressive advances, and may already be incorporated in planned consumer electronics and more sophisticated components. MicroVision is also trying to sell the company, which some see as encouraging, and I see as discouraging because I think the best value to the shareholders would be for the company to remain independent. (That’s another long post for another day.)

Story stocks, stocks that are in companies with impressive stories for whatever reason, make it easier to remain engaged as an individual investor. Dull can work fine, but dull is easier to forget about to the investor’s detriment. Companies don’t always make much noise if they fade away.

I almost forgot to mention, startups can have ridiculously rapid rises. Several times I’ve had holdings that rose 140% in a day, one rose 240% in a day, and the most I’ve ever seen on the market was 640% in a day. So, am I hopeful? Yes. Am I overwhelmed with the recent performance? No. Glad, but not overwhelmed. I’ve seen positively overwhelmed and I look forward to seeing it again.

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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1 Response to Lessons With LTBH Via MVIS

  1. Andy Anderson says:

    Making a million is quite easy, holding on to it not so much.

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