Knowing when to sell

Posted on November 10, 2006
Filed Under General |

Evan Williams has a post titled Knowing when to hold ‘em
which really misses the point of knowing when to sell.

For every, Flikr there are many more purchases that really went nowhere, but the sellers got out with some decent cash in their pocket.

One thing I learned in the bursting of the last bubble is to know what’s under the bubble and when it runs out of steam.

From 1996 to 1999, internet adoption was growing like crazy, and it drove huge growth for any company with anything decent to sell on the web. But throughout the period while everyone was growing they were losing market share because the market was growing so much faster. If you studied the penetration curves, it was clear that around early to mid 2000 the growth of first time internet buyers was going to drop of fast and soon growth would require taking market share. When the market shifted like that the bubble burst.

Today’s bubble seems to be driven by the huge growth in broadband adoption that allows users to try new things for the first time. Soon the current bandwidth driven growth will slow unless we can jump onto an even higher bandwidth adoption curve or we get real mobile to intenet connections via wifi. Think real broadband in the US instead of the current DSL/cable stuff to the home and to the mobile.

Figure out which trend you’re riding and you should know when to sell. Just don’t let your greed confuse you into thinking that the trend goes on forever.

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