The thing that I've learned over time is that the most important question is not 'is this technology real?' but rather 'what is the rate of improvement, and how does that rate of improvement compare to what the market is pricing in?' Because technologies that are real can still be terrible investments if the market has already priced in a lot of the improvement.
The biggest mistake investors make is that they think about technology adoption as binary — it either works or it doesn't. But the more important question is where you are on the S-curve, because the returns are radically different depending on whether you're investing at the beginning, the middle, or the end of that S-curve.
The biggest mistake most investors make on the S-curve is they get the direction right but they get the magnitude wrong — they underestimate the ultimate size of the market and the speed at which it grows, and so they sell too early.
5d ago
Underscored — save the words that stop you in your tracks.
