Lately I've been talking to a lot of new investors and I'm glad to see some people getting some skin in the game for the first time. Getting skin in the game is how you learn and improve your financial health.
That being said, I want to continue to spend a lot of effort towards crystalizing just how risky it is to invest in a company like Invitae, which I've been researching and talking a lot about lately.
If genome sequencing cost declines don’t surprise,
or if sequencing doesn’t end up being extremely helpful in medicine, then Invitae will have won a game not worth playing in the first place. They will have been playing the wrong game all along, and will be grossly overvalued and could even fail.
There is no point not being up front about this. You should only invest in Invitae if you can afford to lose your investment, and yet you still personally believe that the potential upside is worth that risk. (I know this no longer sounds like an investment pitch, but there is a broader, more important societal point to make)
People with few resources are the ones hurt most by loss. A company like Invitae represents a troubling paradox for the new and modest investor because the overall odds are worse than a coin flip that they 'change the world.' (“Changing the world” is always a low probability)
And yet, the world continues to change. And the people least able to take the risks required to participate in ‘world changing’ are the same people who badly need the benefits.
There is no simple solution to this paradox. Or at least, it would be irresponsible to not acknowledge the personal nature of risk-taking.
My “pitch” on Invitae is- ‘If you can afford to swing for the fences, this is a great risk to take... but don’t be surprised at a strikeout, which is statistically the more likely outcome.’