
Ask HN: Do you invest in the stock market? - no_gravity
Im curious to know: Which companies are HN users invested in?<p>And if not: Which companies WOULD you invest in?
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patio11
I invest in 75% index funds, because of Random Walk Down Wall Street and all
the related writing on the subject, and 25% individual stocks, largely for
entertainment value. It's like WoW but much more time efficient.

Approximately 50% of my liquid net worth is Chipotle. I bought back in
2006/2007 and just held.

My other individual picks include Bank of America (yeah, ouch), Microsoft, and
Nintendo. Chipotle more than pays for the shellacking I took on all the rest.
It is ultimately irrelevant though as I still have 25 ~ 30 years before I'll
start selling anything.

~~~
mainevent
In addition to Random Walk Down Wall Street, Daniel Kahneman's Thinking Fast &
Slow has a great section about this topic.

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SatvikBeri
The thing about investing in individual companies is that you're _not_ betting
on whether that company will grow or not. You're betting on whether the
company will grow more than investment professionals expect it to.

I have, consistently (over 10 years) invested in individual companies and beat
the market, but I found that it just wasn't worth the time. So now I put my
money in index funds.

By the way: the biggest predictor of your returns is not which individual
stocks you invest in, but your asset allocation-i.e., the percent of your
money that's in stocks, bonds, etc. If you want to invest I would first learn
about asset allocation before trying to pick individual companies.

~~~
tomgallard
I think you're right, but only to an extent.

I'd say the advantage the individual investor has over the investment
professional, is that the professional has a time-frame of 1-3 years. So a lot
of a stock's price reflects how the company is expected to grow/pay out over
that period.

If you are willing to take a longer term view, asking what's this company
going to be doing in 10-20 years, and how is it priced relative to that, then
I think you've got a much better chance to beat the market (see Buffet for
example)

~~~
SatvikBeri
You certainly have advantages and disadvantages. I could say a lot about the
different situations professionals and individuals are in, and I'd be happy to
share any thoughts if you're interested. That said, I'd like to point out two
things:

1\. Most individuals do consistently worse than the market (so do most mutual
funds, actually)

2\. Most of Buffett's major successes, especially the early ones, have had
nothing to do with his predictions of how a company would perform in the
future. They were based on the difference between a company's current assets
vs. its current stock price. Eg one of his major successes was in buying
shares of Sanborn Map company when Sanborn had assets of $65 per share, but
shares only cost $45 each [1].

It's still possible to invest using this method-known as value investing-but
it's much harder today. The reason is that information is much more freely
available. Eg in the Sanborn example above, it took Buffett a significant
amount of research to find Sanborn and to realize that they were undervalued.
Today all of that information is available to anyone online.

[1]: <http://en.wikipedia.org/wiki/Warren_Buffett#Business_career>

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acheron
Index funds. You can't beat the market consistently. Maybe you can get lucky
for awhile, but if you're relying on that, might as well go to Vegas and have
more fun at it.

~~~
tomgallard
Tell that to Warren Buffet!

Seriously though, of course the average investor cannot beat the market, it
doesn't mean it isn't possible for an individual to do so, or that it is all
down to chance.

One approach is to focus on small companies.

Most active funds will not invest here (it is not worth the time when they
would only be able to invest a tiny fraction of their funds).

As such these companies tend to be under-researched (not necessarily the same
as under-valued though), so if you're willing to put in some leg-work and a
lot of patience, there can be some good opportunities.

~~~
DanBC
> _or that it is all down to chance._

No, it is all down to chance.

~~~
actionbrandon
or cheating--the oracle knows all about that.

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martinrue
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>

~~~
quicksilver03
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.

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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.

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jasonkester
I've been sticking money into the market for the better part of 20 years now.

Initially it was how you got incredibly rich incredibly fast (my YHOO, for
instance, went up 70% during the first _three days_ that I held it). Then for
a short period it transformed into a source of immense sorrow and despair.
Then for several years it was just a convenient way to dispose of any excess
salary that was left lying around at the end of the month.

Now it's back to being the way you turn the $XX,000 you put in today into the
$YYY,000 you'll get back out in twenty years. Index funds (as discussed
everywhere else in this thread) will pretty much do that for you without you
ever having to think about it.

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hassy
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.)

~~~
intended
Taleb is not a source of investing advice - unless you were interested in
trading, in which case he has a few points.

~~~
hassy
Taleb is not a source of investing advice at all - he merely illustrates his
philosophy with examples from finance as it's something he's more than
familiar with.

Stock market is a fool's game by its nature.

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larsberg
Not directly; only through index mutual funds.

Anything else is illegal, as my wife works in finance (HFT). Unlike congress,
employees of trading firms and their families are forbidden from trading any
instrument related to what their firm does.

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in0v8r
I have invested in the stock market for about 1 year. Initially, I used
options to leverage what little money I had and blew up my account. I learned
three important lessons, of which I had read more than once prior to, but they
are as follows: 1\. Do not try to predict the market. Follow it. To be more
specific, and less "duh", invest in securities that show (from a speculative
standpoint) the potential to continue to move in a direction, but with "smart"
money behind it. This brings me to 2. 2\. It takes money to make money. This
is not to say that it is impossible to turn $1,000 into $1M, just a lot less
probable. When you are following the "smart" money, you are playing the game
and the game is based on probability. The more money you have to invest, the
more potential candidates you can hold. By cutting losses short and riding out
the winners, you can make a considerable amount of money. Discipline and money
management are the key here. Being right or wrong is not the way to look at
investing; I tend to say, "I held the stocks that made me a profit, and sold
the ones that didn't." 3\. You will lose money, you will be in the wrong
security and the worst time, and you will 2nd guess a great investment. It
will happen over and over. You have to be mentally prepared to look past this.
You have to be objective and you have to discipline your mind to treat loses
as a necessary part of the game.

Well, to actually answer the question, I am invested in BAC, PFE, GE, and VZ.
All of which are for testing purposes for a new strategy that makes us of
technical analysis over a long(er) term.

I realize my knowledge is minimal, but I hope it helps.

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gth158a
I have never been a fan of buying stock given the 1/3 probability of making
money (you only make money when your stock goes up and lose money when the
particular stock has no movement or declines in value). In my opinion
derivatives present a better alternative and I am particularly fond of stock
options, which can be used for either speculation (bet on the performance of a
company) or as a safety net on your long positions (like an insurance policy).
With options you can make money when the market goes up, down or sideways
based on your position. Something to consider, is that your exposure with
stock options tends to be a fraction of what it would be if buying the
underlying stock. Your exposure is limited (you can only lose as much money as
you paid for the contracts) and your upside is "theoretically" unlimited. If
you are interested in learning about it. make sure to grab McMillan's "Option
as an Strategic Investment" [http://www.amazon.com/Options-Strategic-
Investment-Lawrence-...](http://www.amazon.com/Options-Strategic-Investment-
Lawrence-McMillan/dp/0735201978/ref=sr_1_3?ie=UTF8&qid=1333026894&sr=8-3)

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larrydag
I'm a Couch Potato investor as advised by Scott Burns. 50% Whole Market Index,
50% Inflation Protected Bonds Index. Rinse and repeat every year.

[http://assetbuilder.com/blogs/scott_burns/archive/1991/10/01...](http://assetbuilder.com/blogs/scott_burns/archive/1991/10/01/Exactly-
How-To-Be-A-Couch-Potato-Portfolio-Manager.aspx)

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bkruse
I invest and do well with it. However, that came with a high price of
"learning". I do not recommend that the average joe just buy into random
stocks hoping for the best. Yes, people have made a lot of money doing that -
however, far more people have lost a lot of money doing it. Fooled by
Randomness by Nassim Nicholas Taleb is a great read. If you want entertainment
value to invest in something like activision blizzard with disposable income,
go for it. All in all, I'd invest in bond-funds in about 1 year from now for
the long haul. FTBAX, for example, has a tax-free annualized yield of about
7%. If you are really looking for aggressive growth, go jump into an equity
position in a promising startup that doesn't know their value. Watching
companies like Microsoft and Amazon IPO and grow 100x just doesn't happen as
VCs are getting all their returns from that actual IPO and not the growth
post-IPO.

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Lazare
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 Olympics...without training. Resist that
rabbit hole!

Having said that, here's some tips if you're going to try and pick stocks
anyhow:

0) Don't listen to any tips you see on the internet, including these. If
they're actually any good (and not just part of a pump n' dump scam), they'll
already have been taken by everyone else. (Honestly you're probably better off
_shorting_ anything you see recommended in a public forum.)

1) Pick investments that are likely to go up and down at different times. If
you want to invest in an oil company, also invest in an airline; they often go
up and down opposite each other. (Note: Again, any obvious tip like this has
been exploited to the point that it's no longer helpful. See para 1, above.)

2) Your career is also an investment. Don't, for the love of god, invest in
the company you work for. In fact, don't invest in any company that is likely
to go under around the time you get fired. Work for Amazon? Invest in Barnes &
Noble. Or anyone else you can think of that might do well if Amazon does
poorly, and visa versa. And make sure to toss some money at foreign
investments; if your country does poorly, maybe some other country will do
well.

3) Spread investments out as broadly as possibly. Don't be stupid and say
"hey, the whole market can't go down at once!". It can! But it's less likely
than a single stock going down, and this is a numbers game. There's never
_ever_ a sure thing, but if you can just be a tiny bit smarter than everyone
else, it'll pay off in the very long term. (The easiest way to spread
investments out is an index. See para 1, above.)

4) And don't just spread your investments across an industry, or a stock
market. Try and split investments across multiple asset classes. Stocks,
bonds, commodities, foreign stocks, etc. (Via multiple indexes. See para 1,
above.)

5) Fees will kill you. Anything with active management is more expensive than
its worth. Yes, all active management, no matter how good their track record.
At a micro level, past performance is no predictor of future results, and at a
macro level past performance is actually negatively correlated. A very common
pattern is to do better and better until you do _so badly_ that it wipes out
every gain you've ever made (e.g., the entire hedge fund sector when the
financial crisis hit). (In other words, see para 1, above.)

6) On a similar note, don't be too active in managing your investments
yourself. Reacting to every little dip and spike will waste your time and
attention, rack up huge fees, and guarantee bad results. Once you've figured
out your strategy (hopefully involving index funds), figure out how much you
can save per paycheck, and just do that, with as much automation as possible.
Maybe your strategy is "save 20% of every paycheck, with 2/3 going into an S&P
500 index, 1/6 into foreign stocks, and 1/6 in commodities". That may be a
terrible strategy, but it doesn't matter if you can just stick to it, and
(this is important) don't check to see if it's working for at least a decade.

7) Individual investors persistently WAY underperform benchmarks, because of
timing issues. They will hear some hype about a stock, or an asset class, or
the idea of investing, and they'll enter the market at or near the peak. Then
when things go pear shaped they'll panic and exit, locking in their losses.
It's routine for "the market" to have a higher return than the _average_
investor gets; often _much_ higher. Unless you want to lose all your money,
don't follow the herd. Your best bet is to just leave your investmens alone
(in an index fund) and don't even look at them. If you can't bring yourself to
do that, then be as contrarian as possible. If everyone is talking about how
awesome gold ETFs are, or the growth potential of tech stocks, get OUT. On the
other hand, if a sector crashes, buy!

8) Finally, one more bonus tip: Go for passively managed index funds. (But if
you really want to pick stocks, go for ones with low volatility.)

~~~
driverdan
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.

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investsitall
A low expense ratio S&P 500 index is the way to go. Put enough in, and it's
even better.

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dvogel
Currently: MU (+35%), GLW (-10%), NFLX (+30%)

Previously: HP (+50%), BBEP (+180%)

Prospects: HPQ, MSFT, MKC, DSX

I'm 30 years old, so still chasing growth a bit. I've also got a bunch of
money in a 403b account that's invested mostly in an S&P500 index fund.

~~~
actionbrandon
You've made five total trades?

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padobson
I do not.

I believe wholeheartedly in Mark Cuban's advice here:

"The first step to getting rich is having cash available. You arent saving for
retirement. You are saving for the moment you need cash. _Buy and hold is a
sucker’s game for you._ This market is a perfect example. Right at the very
moment when cash creates unbelievable opportunity, those who followed the buy
and hold strategy have no cash."

Emphasis mine.

Full article: <http://blogmaverick.com/2008/10/04/how-to-get-rich/>

~~~
UK-AL
I think most stocks and bonds are classed as Cash equivalents due to how fast
you can turn them it to cash.

Actually. No I'm wrong stocks are not classed as equivalents due to risk. But
the point is there.

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gutini
Yes, I dipped my toe in recently. Because the market has been a bull over the
last few months, I have made money. Yet, I worry that my success gives me
false confidence in I know what I'm doing. I also devote time to just watching
the numbers. And, like watching twitter, I recognize it's not very healthy or
constructive.

My approach is closest to technical analysis, swing trading, and the CANSLIM
method: <http://en.wikipedia.org/wiki/CANSLIM>

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tomgallard
Yes. I split my investment between low risk, good dividend blue chip stocks
(National Grid, Tesco, BP), fixed income preference shares (NWBD, SAN) and
smaller, high risk companies.

Current favourite that might interest the HN crowd is:

Monitise (MONI.L): Run backend systems on which on a lot of mobile banking and
payment systems operate. Growing really quickly, and recently bought
Clairmail, a US based company doing much the same. Wouldn't be surprised to
see a NASDAQ listing in the next couple of years.

(None of the above is advice!)

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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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digamber_kamat
No. In my opinion its just betting and that too in place which is controlled
by few. Unless I have a lot of money I wont invest in stock markets.

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tacogordito
Yes. Dividend reinvestment is a powerful thing over 10+ year periods.

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code_pockets
Read "The Intelligent Investor" by Benjamin Graham.

~~~
dne
Also, John Kay's "The Long and the Short of It: finance and investment for
normally intelligent people who are not in the industry".

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Tzunamitom
ARM Holdings

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vellum
AAPL

~~~
benjaminwootton
I worry about Apple. They've had a great run, but where can their next
$billion market come from?

To an extent, the current share price will be factoring in future growth on
the same trajectory as we've observed over the last few years.

~~~
forrestblount
The question with AAPL is really do you think smartphones and tablets, as
product segments unto themselves, have reached market saturation? I think
we'll still see massive increases in the sheer number of smartphones and
tablets sold, and I think AAPL will manage to retain a significant (not
necessarily a majority) market share.

~~~
polshaw
You also have to consider if you think apple could continue to keep their
margins in an established tablet market, and a smartphone market approaching
'good enough' like that of PCs today, and whether consumers will continue to
accept a 'walled garden' as tablets become primary computing devices.

E: I'd like to clarify I'm including stuff like no USB ports in walled garden.

~~~
intended
This next statement is probably going to get me nuked, but:

I think people have accepted the walled garden model and they like it.

In a perverse way, their success is partly because of the PC era itself. The
lowered expectations people have of computational devices from windows makes.
Having something that "Just works" such a blessing, for such a ridiculous
portion of all consumers, that their "walled garden" translates into
"sanctuary" for most human beings.

IF in the future mature market, other tablets have also reached a stage where
"it just works", then its an even playing field.

At that point,the walled garden will be just another field to walk between.

Edited for clarity

