By Robert DeVries
Lately, it’s been trendy for Wall Street and Silicon Valley to talk about “hunting unicorns”. In investing jargon, the term generally means finding a private equity company that grows to $1 billion in valuation. The desire is to find the next unicorn, i.e. Airbnb or Amazon, before they are well-known.
In mythology, the unicorn is the only animal of its species and has a magical horn. Thus, the unicorn is used to symbolize something unique and magical. Of course, the unicorn is also a myth and maybe more importantly, singular.
The pursuit of finding something precious and rare to make an outsized gain is not new. It’s true that a treasure hunter can find incredible treasure, but the costs can also be tremendous. For example, let’s think about Mel Fisher, the American treasure hunter best known for finding $450 million worth of gold, silver, and other precious loot at the previously missing shipwreck site of 1622, Nuestra Señora de Atocha in Florida waters. The costs? He lost his son Dirk, daughter-in-law Angel, and diver Rick Case in a diving accident when trying to recover some of the treasure1. There are many more treasure hunters whose names we don’t even know because they never found their ‘unicorn’.
The desire for an outsized gain, or for some the even more powerful emotion of FoMO – fear of missing out, can cause one to lose sight of the outcomes that are most important. Not to mention that to achieve those outcomes, outsized gains are rarely even needed. Often the return required to make all financial outcomes achievable is 4-8% with the risk, considerately lower than the risk to find a unicorn.
Active mutual fund managers have ventured into the private equity waters trying to find these unicorns with mixed success. $15 billion of mutual fund assets were invested in private equity as of June 2022.  The results have been mixed. Anecdotally, for every Airbnb or SpaceX there has been WeWork or Intarcia Therapeutics.
What risks are you or your mutual fund manager taking that could do more harm than good to your financial future? Do you know the rate of return needed to make your financial dreams come true? Working with an independent financial advisor, like a FirstWave Financial WealthCoach™, can help create a financial plan and determine the rate of return required to achieve your financial objectives you desire, without having to believe in a myth or find a magical creature.
Stop hunting unicorns in search of the next big thing, instead seek a financial advocate to help you monitor your progress towards the financial future you desire. To find out how we can help you transform the complexity and confusion surrounding this important topic into your improved WealthConfidence, call us today at (321) 773-7773 to schedule your free initial consultation with one of our WealthCoaches™. For more information about FirstWave Financial check out our website at www.firstwavefinancial.com.
