Some Thoughts on "Certainty"

While it is exciting to evaluate new technologies and growth areas in the markets, I prefer to have a fair probability of a "certain outcome". I want to be as "sure as I possibly can" that my investment will provide the return I have estimated. This is preferred to a great return earned on an unpredictable outcome.

A perfect example of this type of thinking can be gleaned from the recent takeover attempt of Yahoo by Microsoft. There are several factors at play here.

1) The takeover premium at the time was almost 33% given the offer price to the share price. As a betting man, this would have returned a handsome profit to those who like to dabble in arbitrage.

2) Despite its current issues, Yahoo is still the top visited website in the world. A brand identity is extremely valuable and this is probably not reflected in the share price.

3) Yahoo is in an exciting industry with enormous potential over time.

SO What's the problem........

Yahoo will probably be sold at a premium sometime in the future. The problem here is the lack of certainty. When will this occur? What will the price be?

Yahoo is a great brand...... true, but how great given the still relatively young history of the internet. One thing is certain, that evaluating Yahoo's position in the search and advertising marketplace over the coming years will be difficult to evaluate. The high tech landscape changes quickly, and predicting Yahoo's place in t his marketplace will be difficult.

3) The internet is an exciting place to be given the fast pace of change and opportunity. Precisely why I do not want to be there investing on the front end.

So where does one turn........... try The Dividend Post for some straight talk on the future.