“How do you know?”
You never know!

In investing, you have to act on incomplete knowledge.

I came across a great article by @honam lately.

In it, he discusses his decision-making under the condition of an unknowable future.

I think the learnings are worth sharing 👇🏼

“The truth is, in the beginning, we never knew how things would turn out.” - Ho Nam

When you analyze a company, you (hopefully) come up with an investment thesis at the end.

But it’s nothing more than that - a thesis.
The future is yet unwritten thus unknown.

Sequoia’s Mike Moritz has beautifully described an initial investment as a “giant step into the unknown.”

That’s why your work isn’t done after the decision to buy.
Investing is a journey.

You have to reevaluate your investments constantly.

Ho Nam’s article offers four questions (we’ll discuss three) that can help you do that and decide whether you should hold, sell, or double down.

Although they’re primarily VC (Venture Capital) focused, I believe we can all learn something from them.

1. Does the company generate cash?

Especially in the VC world, but also with bigger and more established companies, it’s not a given companies make money.

There’s a tendency to overpay for vision and underpay for value at the moment.

But Cash-Flow is a form of safety.