Do you need to be Visionary to be a great Investor?

Who still has one of these devices sitting around in their drawer? :) :) :)

Confession: I am not a visionary person. That is my "weakness". I can't forecast the next trend. I can't spot the next big thing. I will miss the next Google, Shopify, Amazon, Tesla or whichever company is the next tech giant, or "whatever" giant.

But my strength is this. That I know I am NOT a visionary. 

It is easy to look at what is available today and think of course that's the way things are supposed to be. 

Think back to the days before the ipod (we used to joke about young people not knowing what a walkman is, there are now many youngsters who don't know what an ipod is!). Steve Jobs literally had to imagine the future, what consumers would NEED, before they knew it. 

Not only do you need to be visionary, you have to bet big. Remember IBM? Microsoft was just a young upstart in the tech space. IBM was the giant gorilla in the room and if my memory serves me right, IBM was a $80 bn giant, compared to MSFT at $1b. These numbers look minuscule now but the idea is that there was once a decision point for Bill Gates to ditch working with IBM exclusively and work with other players like Compaq instead. It was an extremely risky move because IBM could have crushed MSFT.

Where am I going with this?

I've had a few people recently asking me about Tesla (because it is not more valuable than Toyota!!),Shopify etc. Many of these companies are great businesses with very visionary leaders. 

The problem is this. 
+ Being a great business is only part of the equation. 
+ Being visionary does not guarantee success. The company will need to execute and bet big, which again raises the risk level.

Assume you can overcome the first 2 issues, do you know that if you had invested in MSFT at its height in Dec 1999, when Microsoft was already dominant and a proven business, you only broke even in Dec 2016? 

SIXTEEN LOOOOONG YEARS!

Valuation mattered in 2000, it still matters today.