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Ask HN: Do you invest in the stock market?

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Re: Ask HN: Do you invest in the stock market?

#51

Post by rdl »

davidw wrote: post #42
intended wrote: post #40

Earlier quoted context omitted.

Because growth. Take a mature industry - what are the sources of potential upside? Growth, more customers, perhaps from new geographies/product categories Efficiency improvements and thence profitability Occasionally new product innovation. Being a mature industry though, the chance of a break out innovation, that changes the face of the industry, is low. So your growth path for the industry tends to be tied to GDP g…

The airline industry grew tremendously over the last 50 years, but you wouldn't know it from many stocks in that industry...

Tech has moats. Tech is probably the least regulated global industry -- in absurd countries like India, tech companies thrive in spite of bureaucracy. In highly unstable places like Israel, tech companies can compete too. I suspect Africa will have tech as a #3 segment (after extractive mining and some kinds of (relatively destructive) agriculture).

Aviation is kind of the diametric opposite of this -- heavily regulated, capital intensive, and exposed to commodities and union labor.

I don't invest exclusively in tech, but I understand tech better than most other sectors, so I feel more comfortable with individual stock picking. I do index funds in most other segments (with the exception of oil, which I also understand, and transport/logistics). I do index funds for S&P 500, international, MCSI 3000, and specific other sectors.

It is a fair question to bring up.

Re: Ask HN: Do you invest in the stock market?

#52

Post by davidw »

rdl wrote: post #51
davidw wrote: post #42

Earlier quoted context omitted.

The airline industry grew tremendously over the last 50 years, but you wouldn't know it from many stocks in that industry...

Tech has moats. Tech is probably the least regulated global industry -- in absurd countries like India, tech companies thrive in spite of bureaucracy. In highly unstable places like Israel, tech companies can compete too. I suspect Africa will have tech as a #3 segment (after extractive mining and some kinds of (relatively destructive) agriculture). Aviation is kind of the diametric opposite of this -- heavily regula…

100+ years ago, trains had 'moats' too, but a lot of those stocks blew up too.

How does back-testing tech as a sector work out over the past 40 years or so?

Re: Ask HN: Do you invest in the stock market?

#53

Post by quicksilver03 »

martinrue wrote: post #10

I trade Forex as a hobby. I find it fascinating to learn about an entirely different industry, yet in many ways see similarities with software development. I've started a blog where I'm going to detail more of my trades and thoughts. To start with, I'm doing a short interview series with established financial traders about their day-to-day work, if anyone is interested: http://trading.martinrue.com

I trade Forex as well, and after a couple of years of unsuccessful manual discretionary trading I've moved into automated trading. Unfortunately the tools available for building a trading robot are ridiculously primitive when compared to what I've access to in my day job, but I do hope someday of making enough money to live from my trading.

Re: Ask HN: Do you invest in the stock market?

#54

Post by driverdan »

krober wrote: post #28
hassy wrote: post #25

Wouldn't ever do it. Stock market is for suckers. (Based on reading Nassim Nicholas Taleb and conversations with people that worked on trading floors.)

This is what I tell myself, but I continually hear stories (friends of friends, of course) of people hitting it big and wonder if I just don't get it.

Selection bias. You'll only see news about the extremes. You'll never see news about the average person who loses money or makes less than the market.

Re: Ask HN: Do you invest in the stock market?

#55

Post by driverdan »

Lazare wrote: post #37

Do yourself a favour; invest in an index. Don't play the stock picking game. The human mind works against you; everyone is convinced that they can beat the market. If it's even a skill (and it doesn't seem to be) it's a vanishingly rare one even among investment professionals . It's very tempting to think that you could be the next Warren Buffet, but honestly, you're about as likely to get a gold medal in the next Ol…

Let me summarize: diversify, hedge, minimize expenses. All good advise but this isn't so much about making money as avoiding losses.

You've done a good job at highlighting that investing isn't as simple as picking stocks and buying them. That's a fool's errand. Instead, it's understanding the risks you're undertaking (and mitigating them), eliminating emotion from your decisions (but understanding how emotion affects the market), knowing when to exit a trade, and most importantly, having a plan and sticking to it.

Re: Ask HN: Do you invest in the stock market?

#56

Post by paulsutter »

Lazare wrote: post #37

Do yourself a favour; invest in an index. Don't play the stock picking game. The human mind works against you; everyone is convinced that they can beat the market. If it's even a skill (and it doesn't seem to be) it's a vanishingly rare one even among investment professionals . It's very tempting to think that you could be the next Warren Buffet, but honestly, you're about as likely to get a gold medal in the next Ol…

Index funds are wise, but remember that when you invest in the S&P you're investing in the US and in the dollar. Take a look at iShares funds, you may want to consider in which countries and currencies you want to store your money.

Re: Ask HN: Do you invest in the stock market?

#57

Post by peterbraden »

hassy wrote: post #45
rbarooah wrote: post #29

Earlier quoted context omitted.

Where would you put your money instead?

I'll worry about it when I have it. But my current thinking is along the lines of: 10-20% in highly speculative stuff (much more so than stocks) and the rest in super-safe stuff (much safer than stocks).

what's more speculative, and what's safer than stocks? If you're looking for low volatility, bonds are often touted as 'safer' - but look at how safe they've been over the last decade.

There's a risk/reward balance in every asset, I don't think ruling out stocks based on the perception that they're risky is necessarily wise.

Re: Ask HN: Do you invest in the stock market?

#58

Post by peterbraden »

Yep, it's been a bit of a hobby of mine for the last year or so. I wish I'd started 10 years ago - compound interest is great, and the sooner you get into it, the greater your time multiple.

Index funds are an easy, conservative, way to get it. They also require the least time. Vanguard seems to make the best products here - money in VTI, VWO and BND will give you a nice balanced portfolio.

But you can beat the market - the key is that you must be patient, not swayed by opinion, or market trends, and spend a lot of time looking into business fundamentals.

I'd advise staying pretty liquid in the short term. It looks likely that there'll be another large correction in the short term as we see another wave of potential sovereign defaults. When everyone is panicking is the best time to buy.

Re: Ask HN: Do you invest in the stock market?

#59

Post by rdl »

davidw wrote: post #52
rdl wrote: post #51

Earlier quoted context omitted.

Tech has moats. Tech is probably the least regulated global industry -- in absurd countries like India, tech companies thrive in spite of bureaucracy. In highly unstable places like Israel, tech companies can compete too. I suspect Africa will have tech as a #3 segment (after extractive mining and some kinds of (relatively destructive) agriculture). Aviation is kind of the diametric opposite of this -- heavily regula…

100+ years ago, trains had 'moats' too, but a lot of those stocks blew up too. How does back-testing tech as a sector work out over the past 40 years or so?

What is the best tool for testing things like this (are there big datasets available for public stock markets?)

From everything I've seen, beta for tech stocks has been positive for basically all of the past 40 years, and S&P has been up by a lot, so yes, tech stocks did well. That doesn't really say it did better than other sectors individually, but better than average.

Re: Ask HN: Do you invest in the stock market?

#60

Post by chauzer »

http://www.betterment.com

- easily invest in the whole market through index ETFs

- no need to do the research and choose which stocks or funds to buy

- automatic deposit set up to seamlessly transfer money every month from my checking into my betterment account and have every dollar invested (no need to worry about shares)

- automatic rebalancing

- no minimum balances/deposits, no holding periods, money is easily accessible and can be withdrawn at any time without penalties

(Disclosure: I work here)

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