The best investment advice you'll never get(sanfranmag.com)
sanfranmag.com
The best investment advice you'll never get
http://www.sanfranmag.com/print/node/3368
13 comments
I've heard about "investing in a mutual fund" a million times and I am surprised these seasoned professionals advised googlers to do that. With enough humility, hard work and emotional control you have a better chance of beating the market. I've never been satisfied with investing in mutual funds because the average returns will be lowish - 5-7%.
So I studied Buffett, Peter Lynch and few other well known investors strategies. It took me about 4-6 months tracking their histories and the reasons behind their decisions. From this I developed my own strategy based largely on Buffett's and its worked a treat. Generally getting about 15% growth a year.
But then I spend weekends looking at annual statements, reading investment forums and have even gone to the Annual General Meetings. For me its all fun.
I guess the Googlers may not have time for that but I believe it makes no sense buying stock of companies you can reasonably assume will perform badly for the next 5years or so (e.g. mortage companies!). Thats what you do when you buy an index fund. You get the good with the very bad.
So I studied Buffett, Peter Lynch and few other well known investors strategies. It took me about 4-6 months tracking their histories and the reasons behind their decisions. From this I developed my own strategy based largely on Buffett's and its worked a treat. Generally getting about 15% growth a year.
But then I spend weekends looking at annual statements, reading investment forums and have even gone to the Annual General Meetings. For me its all fun.
I guess the Googlers may not have time for that but I believe it makes no sense buying stock of companies you can reasonably assume will perform badly for the next 5years or so (e.g. mortage companies!). Thats what you do when you buy an index fund. You get the good with the very bad.
The advice is to invest in an index fund, not a mutual fund. Most mutual funds are exactly the wrong things to invest in, because they eat up much more of your investment in management fees and they also have a history of usually not beating simple index funds.
A good read on the subject is A Random Walk Down Wall Street:
http://www.amazon.com/Random-Walk-Down-Wall-Street/dp/039332...
It's been touted for nearly 40 years.
http://www.amazon.com/Random-Walk-Down-Wall-Street/dp/039332...
It's been touted for nearly 40 years.
I don't know about you, but i've gotten this advice tens of times, at least.
Same here. When my bank tries to sell me on managed funds, I like to tell the rep that the guy that draws Dilbert told me in his book to just invest in index funds. Then, when they try to attack my logic for listening to a cartoonist when it comes to money advice, I rip apart the performance of their managed funds with respect to the index ones.
You seem to have perfected it to an art ;)
[deleted]
Back in the 90's, something similar was done at some of the telecom startups (Cascade, etc.).
I've personally made (and lost!) a fair bit of money in the stock market. Here is my "best advice" find a competent wealth manager. This may take some time, and it will likely be a 2-way interview (ie: they will be interviewing YOU as well, if their client select criteria is simply "write me a check", then move on).
Managing a decent sized lump of money, and your estate at large, is a rather complex endeavor. Proper wealth managers (I happen to go through someone at UBS) will have access to data streams and investments that you as an "end user" will simply not be able to reasonably gain access to.
I keep a bit of money on the side to "play with" in the stock market. But trying to manage 100% of my portfolio on my own would be (IMO, obviously) a less than optimal move.
Keep in mind you don't need to be "rich" either, often times you can open an account effectively with as little as $50K or $100K. Not chump change, but you don't need to be an *airre either.
I've personally made (and lost!) a fair bit of money in the stock market. Here is my "best advice" find a competent wealth manager. This may take some time, and it will likely be a 2-way interview (ie: they will be interviewing YOU as well, if their client select criteria is simply "write me a check", then move on).
Managing a decent sized lump of money, and your estate at large, is a rather complex endeavor. Proper wealth managers (I happen to go through someone at UBS) will have access to data streams and investments that you as an "end user" will simply not be able to reasonably gain access to.
I keep a bit of money on the side to "play with" in the stock market. But trying to manage 100% of my portfolio on my own would be (IMO, obviously) a less than optimal move.
Keep in mind you don't need to be "rich" either, often times you can open an account effectively with as little as $50K or $100K. Not chump change, but you don't need to be an *airre either.
this is wrong. there is no universal answer to what to invest in. smart people go where the money is without bias. if stocks are under priced and heading for a spike you invest in an index fund. but what about right now where the market is grinding sideways? people who invested in commodities are making a killing. when commodities stop making you money you abandon them too. getting attached to an investment just because it made you money is bad.
it's harder to do than to just invest in an index fund, because you have to go against the herd. if you had decided to dump your stock in 99 and invest in commodities people would have said you were insane. You'd be the one laughing now.
Go where the money is. (without bias)
it's harder to do than to just invest in an index fund, because you have to go against the herd. if you had decided to dump your stock in 99 and invest in commodities people would have said you were insane. You'd be the one laughing now.
Go where the money is. (without bias)
also:
yeah, if you had dumped your stock in 99 you would have missed some of the biggest upticks in 200 before the crash, but trying to outguess when the highs and lows will be in the market will make you poor. I think it is better to set yourself a reasonable goal, and sell when you reach it. This keeps you dispassionate about it and prevents greed from letting you make silly decisions.
Index funds are great, but you should try to invest in different indexes that aren't correlated. Rebalance when indexes rise/fall.
It was pretty cool of the Google v.p. to organize investment seminars. Also interesting to read their list of presenters--the Googleplex is definitely on another planet.