Point 1 .Time Horizon
Innovation Themes take time, these companies being at the forefront of growth tend to take time to scale, turn profitable and ready for mass adoption.
It took Microsoft some 13years before it was adopted universally.
It took Facebook 12 years to grow from 100M to 2.7B Monthly Active Users.
Point 2. Portfolio Sizing
Innovation is, without a doubt, challenging.
According to HBS professor Clayton Christensen, 95% of all product innovations fail, and according to the Startup Genome report, 92% of startups fail.
Diversification is KEY!
Point 3. Deep Research and Conviction.
Innovation is often birthed as a result of frustration over the status quo or a problem without a solution.
However some innovations could also be driven by hype and promise that run ahead of fundamentals, and mis-expectations deal heavy blows to company share prices. Do your due diligence and never invest on a whim.
With more research around the company or theme, one would be more resolute in times of market turbulence and could see potential opportunities of investment when others do not.
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Disclaimer: The views expressed here are solely those of the author in his private capacity and not necessarily to the author’s employer, organization, committee, or other group or individual.
