Important Caveats

by Johnny Debacle

When evaluating an investment in a new product, one whose markets had previously been thought to be so niche as to be theoretical, this is the kind of language that would make a savvy sophisticated investor feel longer:

[It] also seems like there will be a high likelihood of these vehicles making their way to high-end rental destinations.

Sounds great! Product X will almost definitely be better off if a rental infrastructure develops around it that allows the product to be consumed in small increments by people who otherwise wouldn’t be able to afford it. Think movies (back when they were $100+ to buy), or timeshares, or NetJets, or Netflix (NASDAQ: NFLX), or whatever it is that Rent-A-Center (NASDAQ: RCII) does for poor people, or the idea of…renting as a business model. It works.

But after I tell you that “Product X” is a jet pack (btw “Product X” is a jet pack, rad I know) I think it’s important to note that there is an important caveat in this whole “jet packs being bought by high-end rental firms” thing. Let’s read the unabridged portion of that quote (from this article):

Assuming the first few owners don’t die horribly, it also seems like there will be a high likelihood of these vehicles making their way to high-end rental destinations.

I have bolded the important caveat for the benefit of unsophisticated investors, as well as the Japanese. When evaluating a product’s feasibility in the market place, and the returns one hopes to generate from an investment in such a product, it is crucial to ascertain the percentage probability that the first few owners die horribly. I can’t stress enough how bad the first few owners dying horribly would be — I mean it would be horrible to your investment. So try and avoid that.

Advanced sophisticated investors may also try to map out the percentage probabilities that the last owners will die horribly (see “Segway, The”). If the last owners were to die horribly, it’s likely your investment’s value will similarly fall right off a cliff.


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  1. Joe P
    October 5th, 2010 | 7:37 am

    Allow me to be the first to congratulate you on taking some of your precious time away from getting it done to provide the investment community with some much needed stimulus.

  2. Paleofish
    October 5th, 2010 | 7:51 am

    Welcome back JD

  3. Anne Stausboll
    October 6th, 2010 | 12:37 pm

    Where and how much can I buy?

  4. JCauto
    October 11th, 2010 | 12:07 am

    Glad you guys are back!

  5. hoser
    October 15th, 2010 | 1:34 pm

    Thrilled to have you back

  6. BGSD
    October 22nd, 2010 | 6:16 pm

    back, etc.

  7. DCTrader
    October 23rd, 2010 | 1:26 am

    Johnny, I would like to invite you and fellow investors to submit your favorite blogs and articles to the Carnival of Traders and Investors hosted at This blog carnival is currently scheduled to run once a month, with the first edition to be posted on Nov. 27, 2010. My goal is to bring together the best, most informative trading and market related articles. And of course, to drive traffic to and from those articles. Submitting an article is easy. If you would like to submit an article to this carnival, please click here. To check out the current issue, click on my site link above.

    Thanks, DCTrader

  8. To The Hilt
    October 26th, 2010 | 4:19 pm

    I had almost lost all hope.

    At first, I checked every day.

    Then every other day.

    Then every third day.

    Then every fifth day.

    Yes, I skipped four. I think that might have been Labor Day and I was drunk off my ass and couldn’t be bothered to check a website that seemed unlikely to reward me with any hilarity (but then I checked the next day).

    But then I pretty much gave up. It’s been about a month.

    But, alas, I couldn’t give up on LoS any more than I could give up breathing, mini-ballin’, or smoking crack.

    And what do I get?

    HILARITY!!! Hooray hilarity!

  9. sugarbush
    October 27th, 2010 | 8:40 pm

    JD > Bear > Juggles’s twitter feed

  10. Patrick Bateman
    October 29th, 2010 | 7:14 pm

    Everything I know about sales I learned from Glengarry Glen Ross. Everything I know about Scotland I learned from Trainspotting.

    Everything I know about banking I learned from American Psycho.

  11. hoser
    November 7th, 2010 | 10:00 pm

    To add important risk factors:
    “In the field of financial security, as limited to the problems of investment policy, I would say there are three types of dangers or threats investors should recognize as possibly existing at the present time. One of them would be the threat from atomic war; the second would be the threat from inflation; and the third would be the threat from severe market fluctuations…”
    -Ben Graham

    Tip: Always remember to include global thermonuclear war as a MAE out.