[Summary]
A unicorn is a term used to describe a growing company that is not publicly traded and has a high valuation.
What makes unicorn companies more likely to fail is not the lack of knowledge itself, but the fact that they later justify their hasty decisions.
In actual investment, the starting point is to separate the distance between growth expectations and profitability. However, it is important to note that it is easy to make investment decisions based solely on the size of your dreams.
In this article, we will organize unicorn companies not as "knowledge" but as steps to check before buying or selling. Don't rush to conclusions, read according to your financial amount and time horizon.
What to differentiate when it comes to unicorn companies
When looking at unicorn companies, first determine what you want to judge. The information you need changes depending on whether you want to know the meaning, confirm before buying or selling, or review your current holdings.
Especially for beginners in investing, the easier the words are, the more they tend to take them as a conclusion. Unicorn companies are not the only basis for making decisions. If you want to check it, it is more realistic to look at it in conjunction with fund management, holding period, and opposing materials.
Situations where unicorn companies are likely to fail
If we look at unicorn companies as a pattern of failure, we must first make narrow assumptions. It is important not to mix up whether you are talking about the market as a whole, individual stocks, NISA or long-term funds.
If you check the following points, things will be much more organized.
| Axis to check | What we see in unicorn companies |
|---|---|
| purpose | What do you use to judge? |
| Time axis | Which is closer to short-term trading, long-term holding, or NISA? |
| basis | Which one is more important: price, business performance, interest rates, exchange rates, or psychology? |
| risk | When things go the other way, where should you look again? |
| action | Will it lead to buying, selling, or doing nothing? |
Points that can easily cause trouble in making decisions
When it comes to unicorn companies, it's not just a lack of knowledge that stumbles. In fact, there are situations where we interpret something conveniently because we know a little bit about it.
- Don't decide whether to buy or sell the moment you see a unicorn company.
- Don’t mix the time horizon that suits unicorn companies with your own holding period.
- Don't increase your position to recoup your losses
- Don't make a decision just based on SNS or rankings.
The important thing here is not to settle on just one unicorn company as the correct answer. In investment, the meaning of the same material changes depending on the market, holding period, and amount of funds. When in doubt, prioritize confirmation over conclusion.
Checklist before buying and selling
Before making any judgments about unicorn companies, check at least these five things.
- Can you explain in one sentence why you are looking at unicorn companies?
- Have you confirmed one or more countermeasures or failure conditions?
- Are you investing your living funds or money that will be used soon?
- Have you decided in advance the criteria for cutting losses, taking profits, and continuing to hold stocks?
- Are you making judgments based only on social media or short headlines?
Checklists are simple, but they prevent you from adding reasons after making a decision. The purpose of identifying unicorns is not to move faster, but to reduce unnecessary errors in judgment.
Summary
Unicorn companies are fodder for organizing investment decisions. Even if you read it as a failure pattern, treating it as a standalone buy/sell signal will lead to poor judgment.
The points to keep in mind are as follows.
- Decide first the purpose of looking at unicorn companies
- Do not mix time axis and amount of funds
- Check not only good materials but also negative materials
- When using NISA and long-term funds, consider how to handle losses
- When in doubt, reduce your position or postpone it.
The more knowledge you have, the safer it seems, but in the market it can become dangerous if you use it incorrectly. It is realistic to treat unicorn companies as a tool to pause before buying or selling, rather than as a word that forces you to make a hasty decision.