If you had jumped into many of those stocks at the time of the IPO hype, you would either have been wiped out completely, or, at very least, would still be trying to climb out of that ugly mess this year!
At this writing, approximately 75% of "all" wealth in North America, is held by retirees or pre-retirees. Although many are still trying to get to the promised land of retirement, I believe that these people, as individual investors, have no place in the coming stampede of Unicorn IPO's descending on this market. It would be prudent to leave this over hyped segment to the big dogs of investing.
I also believe that those who leave big chunks of their Retire.Fund in Index Funds, may also be courting trouble this year. My reasons are many. Besides the ongoing calamity in the macro picture (see - Stocks VS Index Funds) There is also one elephant in the room.
None of these Unicorns currently make money!
What is a Unicorn you ask? A Unicorn is a mythical beast that does not exist!
In the same context, that is now a name
In the last century, these companies did not exist!
However, 2019 has a slew of those, starting with the IPO Big Dog, "Uber"!
Uber has lost Billions, every single year, for 10 years. 3 Billion just last year!
They expect to come to market with an IPO valuation of between $100 Billion and $120 Billion. WHAAT!!!!!!
Once upon a time, Insiders would bring their companies to market much earlier than today. They used to do that to raise capital to "grow" their business. However, in today's over hyped markets, they don't have to.
Why is that, you might ask? Well, if you can stay private as long as you can, while Billionaire venture capitalists such as, Sequoia Capital, Andreessen Horowitz and Founders Fund keep, shoving money into your company, why wouldn't you? In today's market, the Venture funds, and many insiders, merely want to "cash-in" and, you guessed it, you, the public investor, are their Bank!
There is currently a whole herd of unicorns coming into the market this year. Why, because valuations are high, because there is lots of money to be had, and because the future does not bode well for these suspect companies. If you want to make investors believe that your company, which has "never made money" is worth billions and billions, then you have to catch investors at the tip of their euphoria. The thought of "being left behind" is strong for many investors, and that kind of thinking is dangerous! Remember, Deja Vu!
Earlier I mentioned venture funds, Sequoia Capital, Andreessen Horowitz and Founders Fund!
These three were also early investors in AirBnB. Oddly enough, This is the one unicorn that I might consider, in six months or so! Mostly because it's business model allows average people to monitize their own properties. I like that! It has a future!
Others in the unicorn herd include, Zoom technologies, Pinterest, Tradeweb, Slack, Postmates, Palantir, Casper and Cloudstrike, among a few others.
Thoughts:
Palantir has merit because of it's reach in cyber security, but the CIA was an early investor, and, besides utilizing the platform, they no doubt want to get some of their money back.
Casper, is a mattress company, enough said!
Cloudstrike has some promise, and may be a viable option in the future.
The rest are, in my opinion, merely money making machines for insiders!
And, It is your money they seek!
These are not the same as the FAANG stocks were.
Some acronyms that may apply here: LUZ, STAULZ, STAAP
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PS: You might also want to re-evaluate the "Growth" Stocks in your portfolio! I recently de-FAANGed our Retire.Fund
Keep in mind that, the last year this many Unicorns came to market, was during the height of the Dot Com Mania. It took investors 15 years to merely get back to where they were when they invested.
Some were wiped out!
Invest wisely friends, and remember, at this juncture,
"CASH" is also a position!
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