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by codecamper 3228 days ago
Careful going from programming to investing. In programming you have a confidence & that makes sense because the results are often up to your own skills. With investing.. there is so much that is beyond what you know. Things go against you all the time. There is all the finance stuff. But then there are mechanics to the market that can surprise you. Triple witching? (etc etc) It's often not about the fundamentals of a company but what the perception or the trend is.

If I could give myself advice a year ago it would be to start with a paper account, & seriously try to make "money" that way. It requires a ton of research & time. Everyone else is trying the same thing so not only must you figure out which company is under or over valued, you must figure it out before others do. People with entire staffs doing just that.

As programmers, it can be a good idea to stick to software & service companies, because we have a leg up on the understanding of how big those things can get. A lot of investors fail to realize how software companies can grow.

Check out Square.

Square has some of the best programming talent around. They have a Point of Sale system but are also expanding into small business services (like running payroll). I imagine they will tackle inventory, maybe wholesale ordering, do they have a loyalty system? They are using AI to choose who gets small business loans. They offer loans that are smaller than a typical bank would, thus carving out a new niche. As long as they don't hand out too much money to the wrong people, I see this business growing massively. No other software companies seem to combine a great UI, with a mobile / tablet focus. The moat is just once you get set up with it, it'd be a pain to switch out. Curious what others think. (hijack the thread!)

It's my top pick at the moment. I saw it at 9 a share last summer & did not invest enough in it. Even with a market cap of 7 billion, it would seem that it could fit those shoes & then some.

1 comments

If I could give myself advice 20 years ago it'd be 70/30 (world) index/(world) bonds and keep doing so. Go a little heavier (80/20) on stocks in times of crisis (>20% correction). That's all. You can just get lucky over a year and confuse that with skill.
This is what I've basically gone with and I've had good results so far. I basically wanted the most return with the least effort, so I just went for index funds with the lowest expense ratios.

""" There are some potential advantages to the share class structure of the Vanguard S&P 500 ETF. Although VOO is only a fraction of the size of IVV and SPY, VOO offers the lowest expense ratio of the group, charging just five basis points. """ http://etfdb.com/equity-etfs/closer-look-at-sp-500-options/

I get that SPY is better if you need to liquidate millions on a moments notice, but I'm definitely not there, so the nearly-double expense ratio didn't make sense IMO.

This is the most sensible option for most people.

The tough part will be staying the course if the market crashes, which it will at some point. It'll look like the world is ending and you should be investing in gun powder, canned foods and gold. You need to be comfortable with the idea that it may go down (even 40%-50%) and take a long time to come back up but you can keep buying through that and also get dividends...

I would love to just buy the market. The market is overvalued. Maybe better to just be short the market at this point or just sit it out?
It's not easy to tell whether the market is overvalued or not. Right now if you believe interest rates and inflation will go up within the next few years to anywhere close to historic norms then the market is probably on the hot side. But if rates stay low for very long durations then the market isn't hot. Also international markets have lower valuations than the US so you get something out of diversifying there. You could consider a little less stock in your mix these days but shorting the market would be an extremely risky proposition - more of a gamble. In the long term even if the market is hot and corrects you're still going to do OK.