Too good to be true?, page-9

@MarsC

In my opinion, you definitely have to use the portfolio approach with these kind of opportunities. It is simply too risky to bet big on a situation like this.

As I'm pretty sure you also know and already adopt, a more profitable strategy is to wait for good businesses to be sold down because of whatever reasons. As you've mentioned in the FLT thread, FLT during GFC was such an opportunity.

The other thing that you have to bear in mind is, what are the triggers for your exit strategy. For a company like SBB, assuming you are correct and the share price starts to go up, when are you going to exit? At $0.04? $0.05? $0.10? or more? And if your goal is let's say $0.10, and it reaches $0.08 and then it starts falling again, what do you then? Sell at $0.07, or hold for $0.08? I find it very hard making these kind of decisions.

On top of that, I also find that the effort that I need to put in to research this kind of opportunity is not proportional to the amount of money that I'm willing to invest in it. Whilst, with the better businesses, I don't have to exert too much effort and yet still have the confidence to bet big.