How to handle a potential $65k loss.

Looking at my last Whatsapp message to the InsideMarket.net group it seems like my “Just bought more Getswift” announcement could be a watermark mistake, in terms of timing at least!

I even added a smiley face to the message, for extra public humiliation.

This is also why I keep reminding people “We do not give financial or investment advice:)”

KEY MESSAGES

• Highly disruptive global scale (HDGS) stocks are extremely difficult to value using traditional methods.

• Not all HDGS stocks will succeed but you only need a couple to make it so don’t see setbacks as losses so much as lessons.

• No one can foresee every possibility, so you must manage your portfolio so that no one single stock cannot destroy you.

For those who don’t follow the stock, Getswift (ASX:GSW) is a Software as a Service, last mile logistics company with, among it’s backers, large investment houses like Fidelity, IFM Investors, Regal Funds Management and Thorney Investments.

It offers a delivery and customer management program (think UPS or FEDEX standard) that can be set up in 15 minutes if you’re a SME and tweaked to fit into any industry vertical from car parts delivery to pizzas.

There are other similar software programs but none as industry agnostic as Getswift and the software has positive effects on delivery, times and customer satisfaction as well as increased sales as a result.

But recently some media articles claimed Getswift failed to disclose that two early stage signups did not follow through after initial trial periods.

We are yet to hear from Getswift and any ramifications from ASX over the alleged issues and so the stock remains suspended from trading as of 24/1/18.

Suspensions are usually implemented if more time is required to resolve an issue than a standard Trading Halt which Getswift went into a few days ago.

To put a couple of things in perspective, one media report claimed the company was prolific in its announcements and therefore pushing up the price.

In fact, in an ASX Announcement on November 14th, covering 9 integrations of the platform by some large multinational companies Getswift said, “The Company is taking a measured approach in ensuring that only quantifiable and impactful announcements are delivered to the market.”

Another commentator said “The real test of the market putting speculative greed ahead of rationality is the abandonment of the traditional methods used to value companies.”

Firstly, the market is and always will be riddled with people “putting speculative greed ahead of rationality.”

That’s how it works!

Some people get greedy and pile in and eventually others sell out because they’ve done more homework and put more effort in and so understand the company and its potential.

At Insidemarket.net, we have a rule that if something goes up more than 30% in a day, we sell.

But even the best don’t get it right all the time.

Space entrepreneur Elon Musk has lost a few rockets in his time and his team’s pretty smart.

If you are going to invest in the highly disruptive global scale space, I think you have to realise that traditional models and valuation methods may play a lesser role than in your BHP’s and Woolies, but with good reason.

It’s pretty hard to accurately predict what disruptive technology stocks may be worth.

For example, with companies like Fast Brick Robotics (ASX:FBR) or Titomic (ASX:TTT), you cannot apply “traditional methods” to a company in their stage of development.

Same for Getswift.

Is their technology innovative and have a massive effect on numerous industries?

Yes sir.

But doing something that hasn’t been done before is never going to be easy. There will be setbacks and the potential market size and value is pretty hard to predict.

I completely acknowledge that honesty and transparency are the real currencies of such companies until some real numbers start flowing.

For any company, being caught overstating your position, through falsehood or omission will do you serious reputational damage, not to mention cost investors a tonne of dollars, in the short term at least.

But the bigger investing picture is not ‘abandonment’ of the old but the fact we live in a new age.

Technology is such that the right company can go global in a ridiculously short space of time and be worth a lot of money very quickly.

In the 60’s, when my dad was a General Manager of a large manufacturing business, it was a long and slow process to grow to be a national company, let alone a multinational one.

Today it can happen in a year.

So if you invest in these kind of disruptive technology companies, you have to accept that traditional measures and results are not the norm.

SO WHAT TO DO ABOUT ALL THIS

I have always accepted the biggest risk in these early stage - potentially high return stocks is ultimately the veracity of the management.

I am in no way making any suggestions about Getswift's (ASX:GSW) management.

Personally I think Getswift has good technology and I look forward to seeing their announcement regarding the press articles and ASX response.

But what I think doesn’t matter.

The market will decide as it usually does.

It will over react and then slowly find a reasonable level.

So in that regard, let the chips fall as they will.

If you are in Getswift like us, chin up.

Here are a few key things to keep in mind:

1-You can’t do anything to change a sudden price drop so don’t waste time dwelling on it. In other words it’s not what happens to you it is how you react to it that matters.

2-See it as a paid (possibly very expensive) lesson. Once all the facts are in I will be pulling it apart to see what learnings there are to make InsideMarket a better investor.

3-All is not lost! Getswift’s share price may take a big hit but it I still believe it remains a company with enormous potential.

Their tech is acknowledged as being extremely useful and a money saver/productivity improver.

Even the critics admit that.

So as Bette Davis said “Fasten your seatbelts we’re in for a bumpy ride.”

I’m hoping to have another chat soon to Getswift management soon and will let you know when I do. I’d love to hear your thoughts on this article and please feel free to share it.