Self-Learning - the best kind of investment

Why would anyone invest for themselves? Many jobs offer 401k retirement plans, there are brokerage accounts where you can buy index funds at low cost and generally, who has the time or knowledge to invest in the stock market that isn’t a professional with a full time job trading? These are questions I’ve asked myself for years, thinking about whether I should try my hand at investing in stocks. I’ve had some success investing in the cryptocurrency markets, but then again - that’s the industry I’ve dedicated myself to for the past ten years so I’ve got far more knowledge about it than the average person. I’m not so deluded to believe I’m an investing genius and could match luck or timing again reliably. But I still enjoy an intellectual challenge, so let’s explore this.

I remember the first time I bought a stock - well it was a hypothetical purchase of a stock. Back in my sophomore year of high school I took a class on economics, which wound up being mostly a semester of my teacher singing the praises of Warren Buffet’s analysis strategy for picking stocks that would return long-term value. This teacher, who mostly taught history classes besides this foray into economics, was an odd duck - a disheveled looking gent with a foul mouth, which was especially cool (and frightening) as I went to an all boy’s catholic school and he drove a mid-80’s Chevrolet Corsica that he’d tool at way-too-fast speeds in and out of the parking lot everyday blasting 80’s music. As an inner city kid who was among the wealthier suburban kids at this school, I thought it was enjoyable that he’d let us swear in his class, as long as we had something interesting or funny to say. He’d even correct us on our use of certain profanities - not sure that’s what my mom paid tuition for, but here we are. Regardless of the rough nature of this teacher, there were a lot of rumors floating around that he was actually a closet millionaire because of his stock investments despite his outward frugality. Definitely sounds like a Buffet accolade!

What I actually took away from this experience 24 years ago was during a challenge at the beginning of the semester where all students were told to research a company and allocate a pretend $1,000 dollars to it and track it over the course of several months. While it would have been nice to have some mysterious rich benefactor actually seed each student with the money to learn stock investing, I was really committed to making the most of the opportunity. I was among students with rich dads and moms who actually did work in finance, and to-date nobody in my family of origin had any stock holdings whatsoever. All I heard about personal finance growing up is just get a pension and whatever you have in savings and rental real estate incomes (if you’re so fortunate) is what you could live off of.

I wasn’t sure where to begin - some of my friends in the class looked up stocks of Microsoft, General Electric, Ford Motor Company and others. My teacher kept encouraging us to do some sort of fundamental analysis, hinting that the big name stocks were so popular that it was tough to have a competitive edge investing in them. After evaluating factors like price to earnings ratio (P/E), total market capitalization, revenue and other data points, I was feeling pretty apathetic about the project as I wasn’t inspired by any of my findings. But something began to click when I thought about the part time job I had at the train yard where I’d go and inspect shipping containers coming on and off the local railroad in my city. The year was 2000, before the 9/11 attacks and the economy was doing relatively well by most accounts and I recall the level of business the shipping yard I worked at was absolutely booming. While I was making $10 an hour, a pretty damn good wage for a high schooler, I saw the results of the business boom at the company I worked for - new construction, expansion of the shipping yard and the owners of the company started buying new cars and wearing expensive watches. It looked like money was flowing and I naively asked myself if this small company I was working for had a publicly traded stock. While it was privately held and not publicly traded, the local railroad company that we managed shipping containers for was a very old publicly traded company and I decided to look into it.

Researching the stock on Yahoo Finance on the internet at my school’s computer lab and buying a Wall Street Journal at the gas station on the way to school, I was able to glean some information about the stock - an old company going back to the early industrial days of my region and saw it had definitely seen better days. Simply looking at a price chart, it seemed the price had just been downward trending for decades, likely due to the hollowing out of the industrial base of the US. It didn’t look like a good stock and I was discouraged to start all over again, however my teacher encouraged me to dig more and trust my instinct on the prospects of the business. Knowing about the increasing activity of the shipping yard I worked at, not exactly insider information per se, but something most common people wouldn’t have been attuned to, I decided to allocate my full $1,000 fake dollars to the stock and let it ride. It had a small dividend, so I figured at the very least I’d make some hypothetical income from it.

As the year pressed on I was shocked and happy to see my stock pick go up and I went on to take 1st place in the competition - it felt like dumb luck to be honest, but I also felt like I had done something that none of the other kids in class with me did - I used personal life experience and knowledge to inform my research and decisions on investing, rather than following popular narratives easily found within the financial newspapers and publications available at that time. Given the nature of digital media today, plus with social media, there is no shortage of “alpha” available if you’re looking for it from supposed experts on a variety of topics, which leads me to wonder, how do you even make a good investment decision given the abundance of information, some of which is biased at best and deceptive at worst?

Nowadays the ease, cost effectiveness and general availability of index funds and ETF’s makes it a lot simpler to just invest money over time and have decent to great results. The stock market has largely gone up only since the great recession and a lot of the advice I hear from financial professionals and individual investors alike is that is so unlikely that picking stocks will lead to better results than the S&P 500 market index. Often I hear that you should just go with the crowd, keep investing and have faith that your money will rise with the economic prosperity of the US over time. I honestly can’t say they’re wrong!

But after college, which was roughly the time of the Great Financial Crisis to now, I’ve struggled to make any money at all in the stock market. Between switching jobs frequently due to layoffs, having adverse financial events cause me to withdraw from my stock portfolio and the lack of attention and knowledge in the stock market, I would have been better off if I had simply just thrown any amount of money, and I mean ANY AMOUNT (no matter how small) into an index fund over the past 18 years and I’d likely have done just fine. Financially I did NOT do just fine in my 20’s - quite the opposite. I struggled and wasn’t able to get ahead whatsoever. The point that I had finally given up hope that I’d be able to scrape together some sort of nest egg to buy a house, a new car or be able to raise and financially support a family,

However, I found myself learning about and becoming obsessed with cryptocurrency and blockchain in 2014. I actually needed to use Bitcoin to remit funds back home as I was teaching English in Korea and my bank wouldn’t let me transfer funds at the time. The societal implications of cryptocurrency adoption were so exciting to me. I was just obsessed with learning as much as I could and I managed to pivot my career into the space through publishing my writing and research on emerging projects in the space. Like my investing exercise in high school, this personalized knowledge I had developed over years gave me exposure to what I thought were the most promising projects and correlated crypto-assets in the space at the time and I was able to invest what little disposable income I had into them. I mostly did this for fun, as I wasn’t confident that I’d make much money off of them, but rather learn how to participate in these crypto-economic systems that were emerging. Fortunately for me, I was able to learn AND earn as well - and I think anyone reading this would be at least tangentially aware at how explosive the growth of the cryptocurrency market has been since then.

Whether I made pretend funny money off of real stocks in high school or made real money off of funny money crypto tokens in my early 30’s, I am absolutely not asserting that I know much about investing generally at this point. Financial managers are actually trained in strategizing saving and investing over the course of a lifetime, which I just nerded out randomly on things I was interested in and managed to get an edge on the market. I am no Warren Buffet - I could never be that, nor do I want to be.

What I do want to convey in this post is that opportunity in life can often come in the most unexpected ways and often may correlate with something you’re personally passionate or experienced in. Each individual has a unique path in life and views things differently from those that surround them - even if you’re not finding specific investment opportunities that lead to profits for you, you may wind up discovering a community of people who would strengthen your network, present friendships and take you places you never imagined possible before. If you think something is interesting, don’t discount it as silly or not with your time - life is short and the times you feel most alive immersing yourself in what and who are important to you matter more than trying to adhere to some pre-formed path that is popularized and commoditized.