I write this as someone who is interested in seeing you develop as an investor. Are you learning the wrong lesson? If a business collapsed within 1-2 years, was it not a serious analytical mistake in the first place? You should not be looking to invest in something so fragile when the downside is a near wipeout/huge impairment over such a short period.
Also, the 5 big investments, 2/3 wrong, is, in my view, a flawed framework. I don't think history or empirical evidence supports the "only need to be right 50% of the time" approach as the optimal way to compound wealth for an individual. There's a good reason the greatest to ever play this game, who has some of the highest outperformance of anyone, focused firstly on not losing money, and having a very high hit rate in terms on not making losing investments.
Just things to consider as you develop into an ever better investor, Sebastian!
I totally agree (and also acknowledged in the post) that I overestimated the business when I bought it, especially the dependence on USFoods. But frankly at 0.70 not much success was priced in given the information at that time (e.g. sale of warehouse which was communicated to generate $18M). Further, it was the bet that management can improve the business, which they have tried and failed. In Mircocaps, you rarely have a good business from the start, but rather a fragile business with potential. That potential is what I saw. Did I overestimated it? Likely. But I don’t think that was the big mistake here.
Re: Hit rate. Of course downside protection should come first but if you make 5% in 5 years you haven’t lost money and still I wouldn’t call this a winner. If you look at guys like Soros, it was communicated he had a 50%ish hit rate. You can also look at the book „the art of execution“ where the author shares the same finding.
For what it’s worth, I would be careful with Soros/Druck emulation and stats. As an investor and allocator, the correlation of high hit rate and long term performance and duration is as tangible as we get in this industry. The book you mentions suffers with survivorship bias. Schloss, Cundill, and Buffett are much better models. 50% rate has outliers with amazing success and a huge graveyard or underperformance or worse.
"From now on, once I think my biggest position is not my best idea, I know I have to adjust the portfolio" - Thanks for sharing, I find that I'm constantly testing my psychological biases when comparing my top 5 ideas.
Thank you for the honest review of your investment case. This was the first write-up I have read from you. For me, it was an emotional rollercoaster ride—at first, I felt I had missed the boat, but in the end, I was glad I didn't sink with it. Please keep up the great work! I wish you all the best with your next investing endeavors and a good start into 2026!
Good self-scouting. Learning how to position-size is one of the most important steps an investor can take. I followed you into IVFH but I kept my position tiny. It’s hard to get out of a bad microcap. But if you keep the stakes small, it’s merely a flesh wound.
It's really great that you are sharing this part of your journey.
It's so hard to sell things when they are working and watch it run another 40-50% on momentum. I see why some investors set hard rules around position sizing. What the business is doing vs what the stock is doing can be so different.
Investing is hard. All we can do is try our best to learn from mis-steps and stay in the game.
Thanks for sharing this post-mortem, Seb. I can definitely relate to the psychological biases you highlighted. Your post was a great reminder of some of the pitfalls we all face. Happy holidays!
I write this as someone who is interested in seeing you develop as an investor. Are you learning the wrong lesson? If a business collapsed within 1-2 years, was it not a serious analytical mistake in the first place? You should not be looking to invest in something so fragile when the downside is a near wipeout/huge impairment over such a short period.
Also, the 5 big investments, 2/3 wrong, is, in my view, a flawed framework. I don't think history or empirical evidence supports the "only need to be right 50% of the time" approach as the optimal way to compound wealth for an individual. There's a good reason the greatest to ever play this game, who has some of the highest outperformance of anyone, focused firstly on not losing money, and having a very high hit rate in terms on not making losing investments.
Just things to consider as you develop into an ever better investor, Sebastian!
I totally agree (and also acknowledged in the post) that I overestimated the business when I bought it, especially the dependence on USFoods. But frankly at 0.70 not much success was priced in given the information at that time (e.g. sale of warehouse which was communicated to generate $18M). Further, it was the bet that management can improve the business, which they have tried and failed. In Mircocaps, you rarely have a good business from the start, but rather a fragile business with potential. That potential is what I saw. Did I overestimated it? Likely. But I don’t think that was the big mistake here.
Re: Hit rate. Of course downside protection should come first but if you make 5% in 5 years you haven’t lost money and still I wouldn’t call this a winner. If you look at guys like Soros, it was communicated he had a 50%ish hit rate. You can also look at the book „the art of execution“ where the author shares the same finding.
For what it’s worth, I would be careful with Soros/Druck emulation and stats. As an investor and allocator, the correlation of high hit rate and long term performance and duration is as tangible as we get in this industry. The book you mentions suffers with survivorship bias. Schloss, Cundill, and Buffett are much better models. 50% rate has outliers with amazing success and a huge graveyard or underperformance or worse.
"From now on, once I think my biggest position is not my best idea, I know I have to adjust the portfolio" - Thanks for sharing, I find that I'm constantly testing my psychological biases when comparing my top 5 ideas.
Very entertaining and well written! Thanks Seb.
Seeing your journal entries, how you make your decisions and reviewing them was very insightful. Thanks for sharing this part of your journey!
Thank you. Happy you liked it!
Thank you for the honest review of your investment case. This was the first write-up I have read from you. For me, it was an emotional rollercoaster ride—at first, I felt I had missed the boat, but in the end, I was glad I didn't sink with it. Please keep up the great work! I wish you all the best with your next investing endeavors and a good start into 2026!
Thank you. Appreciate it. All the best for you too!
Good self-scouting. Learning how to position-size is one of the most important steps an investor can take. I followed you into IVFH but I kept my position tiny. It’s hard to get out of a bad microcap. But if you keep the stakes small, it’s merely a flesh wound.
This is fantastically honest after such a disastrous decline - well done. I’m sure you will do better for having made this mistake.
Thank you!
It's really great that you are sharing this part of your journey.
It's so hard to sell things when they are working and watch it run another 40-50% on momentum. I see why some investors set hard rules around position sizing. What the business is doing vs what the stock is doing can be so different.
Investing is hard. All we can do is try our best to learn from mis-steps and stay in the game.
Happy Holidays to you and your family
Yes totally.
Happy Holidays to you and your family too!
Thanks for sharing this post-mortem, Seb. I can definitely relate to the psychological biases you highlighted. Your post was a great reminder of some of the pitfalls we all face. Happy holidays!
Thank you, Mathieu, glad you enjoyed it. Happy Holidays to you too!