The more time goes on the more I think a good rule would be "however much I spend at the company, spend on the company (in shares)". I look at my Spotify sub, my MSFT sub, and an Apple IIgs sitting in a box and wonder 'what if'.
That's my main investment rule. I invest in companies who's products I like and own. But then I also buy the dip. So when a company I like/whose product I use is at a discount, I invest.
It makes me feel better too when I buy something from them: "oh, some of that money I just paid is going back to me"!
There are people here who bough NVDA at a bargain with the same reasoning.
I did an exception for Meta (no FB, no WhatsApp, no instagram: all the Meta CIDR blocks are blocklisted by my firewall and all the Meta domains are blocked by my DNS resolver: that's how much I hate that turd) which I hate with a passion because the stock at $100 in 2022 (was it 2022?) was just too good to be true. But then I do use React so there's that!
There are people here who bough Blackberry, Kodak and Blockbuster at a bargain with the same reasoning.
Quick check: iPhone 1 was $500 at launch. Apple shares were $5, apple stocks 41x'd since. If you bought the same amount in shares you'd have $20k, not bad.
Nobody bought a iPhone because they thought it would appreciate in value.
The trick is to identify products which will be considered iconic, while they're still on the market. This is crystal-ball-gazing, and that kind of game isn't for everyone, but it only takes one smash hit to make a profit on the total investment. There are certainly people who do this as a hobby / side hustle.
You can absolutely guarantee everyone isn’t going to follow that rule so why bother considering it? Also, nothing says you need to keep investments forever, a rolling fund where after X months you sell the stocks and repurchase based on current spending habits could work just fine at scale.
The price of other stocks would plummet from low demand
Demand is ideally a function of fundamentals.
The stock price being overvalued is irrelevant if “everyone” is buying it. This is a hyperbolic example but it plays out in the valuation of the sp500 when legions of folks just dump into an index fund.
My 2007 GE kitchen appliances for my new home funded with a WaMu mortgage may are similarly unimpressive as investments in 2024.
(And cherrypicking history is easy!)
And your mortgage probably makes you wildly over/under (but not correct) weight on residential real estate according to whether you consider it a payment you need to reflect in your portfolio or a part of your portfolio and therefore it's mising a justifying expenditure.
And you'd presumably have no exposure to industrial real estate, defense, anything b2b, ...
But it's a fun idea and I'll admit to similar irrational thinking when I was annoyed by Amex charging (and refusing to refund) me and my wife separately while I was in the middle of trying to talk to them about merging them/closing one. (Which reminds me, must do that soon before it happens again..)
The lesson for me: I don't know enough of the industries to base any financial decision on it.
3D cards, web, smartphones, search, social media, CPU advances, chip manufacturing and shortages, blockchains, AI, the list is endless I suppose. Like most here, I've read about them all from the early demos all the way to the mass adoption.
I'm very happy to invest in index funds and observe tech only from the tech point of view, without stressing about picking the winners.
Of course I subsequently sold when I felt Apple had jumped the shark (I think they were making iPods in multiple colors, something like that). Around 2012 probably.
[1]: https://en.wikipedia.org/wiki/Efficient-market_hypothesis
There are no alternatives to Nvidia GPUs if you want to efficiently train an AI, they have an effective monopoly.
Personally i would have invested in TSMC/ASML or Intel as this point. Buy the shovel maker.
>>TSMC
Relatively low margins, few good well negotiating customers. Can't grow fast.
>>ASML
What do you think market could have missed there? Good company with simple business model. Very unlikely to grow fast.
>>Intel
Terrible company with long track record of stupid decisions and deception. What make you think they will suddenly turn around and start innovating?
That's why my bets are on them.
Everyone is reliant on ASML and unlikely to change.
Intel has fabs and is too big to fail, the us government won't let it happen.
I'm making a safe bet on the long term, not a speculative one based on a technology that will or won't be worth that valuation.
After all, if it's election day, my analysis says FooCorp is worth $50 under a Biden administration and $100 under a Trump administration, and the candidates are neck-and-neck, that means the shares are worth $75. But tomorrow the shares will have either gained or lost $25.
But as detailed recently in Going Infinite, Jane Street's losses around the 2016 election were because they didn't know outcome was worth the example $50 and which was $100.
Figuring out which ones, and to what extent, is an unorthodox but effective path to wealth.
A finance professor is walking across the University of Chicago campus with a student. They come upon $20 lying on the ground, and the student leans down to pick it up. The professor said, “Don’t bother. If it was really there, somebody else would’ve already picked it up.”
1) Someone with more resources than you has different aims and incentives than you; the prices of those shares likely reflect their valuation, not a "true" value.
2) Because of 1, the the future returns that are reflected in the price of the stock are not necessarily for the company alone, but also of future returns of other companies and ventures that are connected to the stock in question through this hypothetical someone.
3) Volatility is good if you're poor. I want my money with a winner before everyone else knows it's a winner. Index funds are slush for smart money's liquidity scams.
https://arxiv.org/abs/1002.2284
What's your bet on the latter? I'm... skeptical.
> We ask our question, call it question 1: “Does there exist a strategy that statistically significantly (after accounting for possible data mining) makes money (after accounting for transactions costs)?” An answer to that question essentially tests each of the possible 3n strategies.
which is non-sequitur. It's like asserting the only way to find the shortest path between two vertices in a graph is to exhaustively check every path, because waves hand.
Also note that paper doesn't appear to have undergone any form of peer review.
One way to think of trading is you're kind of in a ponzi scheme. Not an illegal one, but you're buying stock today you're hoping somebody else will buy off you at a higher price one day in the future. If you short a position, you're hoping that somebody will sell you stock at a lower price than it is today for some reason.
All of this suggests to me that markets are not the perfectly rational machines people insist they are. Sure, most people would do better to buy and hold indexes than to time trades on individual stocks (by a long margin), but the argument that all value is priced in all of the time is just daft.
This is not an implication of the efficient-market hypothesis. The efficient-market hypothesis implies no investment strategy can have expected returns greater than the total market, but says nothing about what the returns of the total market actually are.
Your argument seems to be "yeah, assume there is no value or edge, and let's just hope for variance in our favour" is what the majority of professional traders, funds, quants, and so on are all doing. If that isn't what you meant, I'd be interested in how you clarify it: what do you think they're doing, and why?
Because yeah, not buying things you want to watch your money high score go up is a pretty sad way to go through life.
Except a publicly traded share is much more liquid.
An expensive watch does even less than less expensive watches, especially smart watches.