Unsolicited Investment Advice

I Am Not Your Investment Professional

No one knows what they’re doing https://youtu.be/oo4H-u3UVhY . Least of all me. This isn’t intended to be advice, per se. I’m not going to lay out a seventeen step plan for succeeding at investments. First of all, I don’t know how to do that. Be suspicious of anyone that claims they do.

What I can offer, and what I think might be valuable, is an overview of how I manage my own investments. Why should you trust me? You shouldn’t. Be suspicious when people tell you what to do with your money. I offer only one dude’s perspective. Find value where you will, and discard the rest.

Another Foundation Trilogy

Meet my Foundation Trilogy. No, not that one Although also good. .

This one:

1. You can’t time the market.
2. You can’t beat the professionals at their own game.
3. You can’t predict the future.

You Can’t Time the Market

The classic advice is to “buy low, sell high.” And that’s true. It’s good advice, in the sense that it’s the correct thing to do. It’s terrible advice in the sense that nobody can do it, and you shouldn’t try. It’s the kind of advice that someone gives when they want to seem helpful while making sure you fail. It’s the Lloyd Fredendall https://en.wikipedia.org/wiki/Lloyd_Fredendall ⊕ If you think that reference is obscure you better buckle in because I’m just getting started. of advice.

For the most part you’re unlikely to know when stocks are going to be at their lowest or their highest. Neither the dip nor the peak are obvious until it’s too late to act on them. Worrying about buying at the absolute minima or maxima isn’t value-added time. Don’t do it.

You Can’t Beat the Professionals (at Their Own Game)

Think of investment like war. Just picture it. At the moment I’m imagining a game of Risk. I’ve conquered all of Oceania and the two extra men at the beginning of every go are my compound interest.

Then I glance over and I notice that my friend, a professional investment banker, has brought a flamethrower to a friendly board game night. Probably a Boring Co brand one He was an early investor. . Anyway, now the entire board is on fire, the plastic is melted, and nobody’s having any fun.

That’s what it’s like trying to compete against the professionals. It’s not just that they have better tools, they’re not even playing the same game. They’re bringing guns to knife fights. They’re setting up competitive “gun at knife fight” tournament brackets, then selling tickets to watch.

You’re not going to find $20 bills on the ground investing in big, well-known companies like Ford or Microsoft. I’m not saying don’t do it. Understand why to do it, and then do it the correct amount for your financial situation. Do it to beat inflation. Don’t do it expecting a huge payout. If you’re going to buy some Walmart Full disclosure, I am sitting on some Walmart. , prepare to sit on it for a long time.

You Can’t Predict the Future

There’s no way to know which particular company is going to change the world. By the time it’s obvious, it’s going to be too late to ride their stock price to an early retirement. Similarly, don’t kick yourself too hard for not buying Bitcoin or GME or Apple at IPO. There are lessons to be learned from each of them, but none were uncontroversially the right choice at the time.

Worrying about what could have been is only useful inasmuch as it helps you develop strategies to win next time Next time, Gadget! .

Alas, Bitcoin

How much was Bitcoin worth the first time you heard about it? I think it was less than a dollar. If I had put $20 per paycheck into Bitcoin from then until now, I’d be comfortably minted a multi-millionaire D’oh .

So why didn’t I?

I thought that the long-term value of Bitcoin was $0 I still think this. . However, what I eventually came to realize was that even if it was, I could still make some money in the near-term. If it ever crashes to zero, that probably happens long after I’m dead. ⊕ Contrary to popular belief, I am not an ageless immortal demi-lich. ⊕ … Yet.

What did I learn?

Make more small bets. There were times in my life where I couldn’t have spared $20 from a paycheck, but for the most part those were the exception. A trivially small bet a decade ago would be enough to materially change my life now. There was no way to know that at the time, but nothing is stopping me from making bets now that may pay off before retirement age.

How to Find the Next Big Thing, Probably

Themes. The answer is themes.

I don’t know which companies are going to pay off, but I have a general sense of some areas that are likely to lead to big things in the future. This is a list you’ll need to figure out for yourself, but here’s mine and how I got to it.

eSports and Video Games

I’m not a sports person. I don’t foots the ball. I’m not interested in eSports, but other people are. Like WAY interested. I think eSports are only going to get bigger. I don’t understand the youth I have it on good authority that The Kids Are Alright . As far as I can tell they’re even more interested in eSports than my generation, and the kids behind them more than that.

Cybersecurity

Perhaps this is cheating, since it’s my industry. You can’t bet on the bad guys. Yet. Someone’s going to make a mint on the blockchain when they come up with a way to invest in BadGuyCoin. You can definitely invest in people taking the other side of that bet. There’s a lot of innovative, interesting work going on in cybersecurity, and it seems unlikely to become less important in the near future.

Biotechnology

A new generation of mRNA-based vaccines is poised to radically change the way we treat disease. The silver lining of the COVID-19 pandemic is that we were able to get mRNA vaccines into public hands at least a decade before we likely would have otherwise. Now there’s an HIV vaccine https://www.nih.gov/news-events/news-releases/nih-launches-clinical-trial-three-mrna-hiv-vaccines in human trials, and the sky is the limit.

Commercial Space

Multiple small companies are currently trying to figure out how to do interesting things out in space. Some of them are probably going to succeed.

Fake Meat

Cows are expensive Like really expensive. . Most Americans have never seen the actual cost of a pound of beef because every step in creating it is subisidized. Despite that, the price is only climbing. Eventually fake meat is going to be more economical. Will a generation raised on Impossible Whoppers and the McPlant care if their steak was grown in a vat if it’s a quarter the price?

Putting it All Together

1. If you don’t have a brokerage account, open one. It’s easy. If you want recommendations, I have them.
2. Figure out how much you can afford to bet. Is it $20? Is it $200? Set up automatic transfers to your brokerage.
3. Find companies aligned with one of your themes. Are they doing interesting stuff? If your brokerage provides access to Morningstar ratings, what do they think? Do you have good reasons to think the experts are wrong?
4. Buy some.

What you do next depends on if it’s a short term bet or a long term bet. Most of the best bets pay off over the long term. I’m sitting on some stocks I don’t expect to sell for ten years. Good investing is, in many cases, boring investing. Interest compounds over long periods. Buy stuff you think might be valuable some day, then give it a long time to become so. Remember that at the time you bought it, you paid nothing. Or almost nothing. This is about small bets, right? Bet amounts you’d be comfortable never seeing again, then give them plenty of time.

Having said that, it’s possible that you may have an insight that the rest of the market missed. When people were panic-selling at the start of the COVID-19 pandemic I was calmly buying as much of every airline as I could afford. I knew that the scare would pass, and when the airlines returned to their pre-pandemic prices, I sold at a tidy profit. I knew my sell trigger the day I bought. Those were short-term bets.

Good luck, and may the odds be ever in your favor.