Thanks ecoool. Let's explore this a little further.
In your scenario above, both investors (those who bought in at $10, and those who bought in at $3.50) are now very rich. Those who got in at $3.50 are significantly richer, but that only matters if you focus on what you could have made, rather than what you have made. (I should add here too - I don't think MSB will be at $10 after out first positive read out (let's say the CHF result). Even if it got there eventually, you'd have days possibly weeks to accumulate between $3.50 and $10, and could do so with the confidence that you are buying into a significantly derisked company).
But let's keep the $10 buy in and add some additional factors into this model:
1. the first trial turns out to be a failure and the price drops to $1.50 (a price guesstimate, but I think a realistic one) (also, if this is not a risk that people are willing to consider then there is effectivenly no risk in this company at all, so sell you house, and pile all your free cash into MSB)
2. the $100,000 investment is a signifcant amount of money in relation to your total net worth and other financial committments (mortgage, kids etc). (We know that many on this forum are "up the duff" in MSB, and have taken ludicrous, high risk decisions to free up cash and increae their holding).
3. Let's also assume you're an invetment advisor, with a high public profile (like, say, AK) with a customer base that's a mix of mum and dad investors and more sophisticated investors with a medium risk profile at most.
Scenario 1 ($3.50 entry point):
Action: Invest $100k @3.50 before first P3 read out
Result if P3 successful: you make $8.5 million
Result if P3 succesful: you have lots of very happy clients
Result if P3 unsuccessful: your $100k investment drops to $42k
Result if P3 unsuccessful: you have lots of very unhappy clients
Downside risk: wiping out a significant part of your net wealth if trials fail
Downside risk: wiping out a significant part of your client base's net worth and losing clients
Upside: you're richer that the other rich people who bought in a bit later than you. Their yacht is smaller than your yacht.
Scenario 2 ($10 entry point following successfull P3 read out
Action: Invest $100k
@10 after first P3 read out (again, I think this entry point is too high for a post first P3 read out, but will retain it so people dont think I'm changing th goal posts)
Result if P3 successful: you make $3 million
Result P3 if succesful: you have lots of very happy clients
Result P3 if unsuccessful: you still have $100k (which you can now invest in other stocks)
Result P3 if unsuccessful: your clients will be oblivious to the bullet you dodged on their behalf
Downside risk: next to none, because you're buying into a derisked company. The chances of you selling out and walking away with less than $100k are next to none.
Upside: you make $3 million
Upside: you make your clients rich, and they tell their friends about you, growing your client base
Upside risk: you're not as rich as the people who bought in at $3.50. Their yacht is bigger than your yacht.
Now, these models have big holes, like all models. I'm simply pointing out that scenario 2 has massive upside (which not even you deny) and significantly less downside (unless, not neing as rich as the other guy is considered a "risk"). The overwhelming majority of investors would be happy with scenario 2. There are many on this board who sit in scenario 1 (me included). That's their prerrogative, but they should stop slagging off those who prefer scenario 1 (I'm not suggesting you do).
Finally - love your posts as much as the next person. Keep them up.
(20min delay)
