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There's one big opportunity left in home automation 🏡
When you think of home automation, all the great investment opportunities have been taken, right?
You've got Nest, the smart thermostat, that Google bought for $3.2 billion, Ring, the smart doorbell, that Amazon bought for $1.2 billion, and August Lock that Assa Abloy acquired.
But there's one area of automation that hasn't gone mainstream yet. And this company is about to do just that.
This one tech company has returned investors 40% year-over-year, even in this market downturn
And early investors have already seen a 10X return since 2015
This company has incredibly strong patents in the smart home space, patents capable of removing copycat sellers from Amazon
This startup has already generated over $5 million in online sales only, and is now at an inflection point, about to scale aggressively into retail and B2B real estate developers.
This company has the potential to be the next Ring or Nest, yielding major gains for early investors.
Learn more about this exiciting opportunity at invest.helloryse.com
“Charlie and I have a number of filters that things have to get through before we'll think about them.” —Warren Buffett
When bull markets are in full force, stories rule the day. Fundamentals take a back seat to a good narrative, especially if quick riches are at the heart of that narrative.
When a bull market ends, as we saw in many technology names last year and entire markets this year, fundamentals start to matter again. Profits. Cash Flows. Balance Sheets. Competitive Advantages. Valuation. All those things that seemed boring and less likely to produce a quick buck gain some attention again—at least until we reach the point of extreme pessimism in a downcycle, and the crowds just want to hold cash.
The ability to filter and exclude certain investments from one’s portfolio is an important skill in avoiding grandiose stories that often lead to the biggest losses. You may feel a little left out as friends and neighbors ride the upcycle of a speculative boom from time-to-time, but you’ll increase your chances of surviving the eventual bust, and avoid the stress of trying to time an exit before everyone else.
When looking through some of our old notes, we came across some deal-breaking questions from Professor Sanjay Bakshi that can serve as a great basis for an initial filter:
If the answer to any of the following questions is a NO, do not proceed further:
Can you visualize what this industry will look like a decade from now?
Is this a scalable business model?
Is this business a net positive for humanity?
If the answer to any of the following questions is a YES, do not proceed further:
Is this a highly leveraged business?
Is the P/E multiple more than 50x?
Has the current management indulged in any significant capital misallocation?
Do you know of any other significant corporate mis-governance practices of the current management?
Following those questions may have helped some people avoid those high-flying technology stocks that are down 70% or more over the last 18 months. Lack of visibility into an industry’s future, leverage, high P/E multiples, and questionable capital allocation and corporate governance are something that many of those investments had in common.
As we often do, we’ll end this section with some further wisdom from Warren Buffett, who turned 92 last week (on the same day our own Mike Pruitt turned a lesser number in age). Mr. Buffett’s filters are simple, and they’ve served him well for decades. He mentions them over and over in his annual letters, and they are also summed up well in this excerpt from Peter Bevelin’s Seeking Wisdom: From Darwin to Munger:
At a press conference in 2001, when Warren Buffett was asked how he evaluated new business ideas, he said he used 4 criteria as filters.
Can I understand it? If it passes this filter,
Does it look like it has some kind of sustainable competitive advantage? If it passes this filter,
Is the management composed of able and honest people? If it passes this filter,
Is the price right? If it passes this filter, then we write a check
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