Why every knowledge economy worker should learn to invest
Working pays the bills, investing levels you up
In 2007, I wrote a post saying that every tech pro should blog. I’ve also been vocal that you should make art even if just for fun and you never get great at it. I stand by those ideas and am happy to have motivated several friends and contacts to try new things that encourage personal and professional growth.
Today I wanted to challenge you to take something else on as well: investing. Not index funds / Vanguard / Wealthfront or passive investing. That’s all well and good and you should be doing that for retirement (in fact that should be your bread and butter for savings, always max out your 401k - it’s free money from your employer). Today I’m talking about active investing: whether as something like an angel investor in a startup or two or equities in the public markets.
Some reasons why I think this is something all digital professionals should be interested in:
If you are “extremely online” you are conditioned to see trends — and potentially already good at it
A lot of finance guys are great with numbers but not all of them have the creative vision that digital pros have to be able to see trends in different sectors before they happen. All great knowledge workers innately have this (it’s part of the job, as the internet moves so fast) and are skilled with using their own intuition and data to predict the future. Since you already nurture this skill you could put it to work in the markets too.
It’s fun to make predictions, follow companies and learn about sectors you know nothing about (or even more about your own sector)
If you are in the internet industry you take an active role in life. You probably already follow technology companies and popular brands but when you have skin in the game you’ll really be motivated to follow closely. Additionally investing is a great way to broaden your scope of awareness of the world. I’m personally really interested in life sciences as my father was a doctor, so have chosen biotech sector to study invest in and follow closely (in addition to of course investing in tech, which has done much better lately). Choose something that is interesting to you and it’s a great excuse to learn about new sectors and ideas, something you will never regret (learning is even more valuable than money — so whether your have gains or losses, you still win!).
It’s a stock picker’s market
The indexes are at crazy high levels and in the near term, unless you’re trading options (please don’t) you are not going to make asymmetric returns on them. You should own those in your retirement account and never even look. But separately, individual picks are a real chance to improve your financial situation. Additionally, if you’re young it’s good to have some risk in your portfolio.
Look even if you didn’t want to learn about a new sector, you already know about marketing and data. So with that if you are in marketing or data science, you easily could have called that Tableau, for example, would be a big winner from IPO since most of us know how widely used this is. Would have been a big win with long term gains if you bought the IPO and held through acquisition. My point here is you likely already know a few picks that have likelihood of winning with your unique background and experience. Take advantage of this. Wall street doesn’t know these products and teams as well as you do, they just don’t.
You’ll learn about financial sector which is incredibly valuable
In my experience most digital pros don’t know much about financial side of companies, or even much about how public and private markets work. Learning this is important so if you ever work at a startup or public company you can understand how and what is a fair amount of equity to negotiate for, and also simply to understand how companies fund their operations.
You may already follow / bet on sports — why not also follow and invest in something real?
While there’s nothing wrong with following sports, if you’re going to engage in things like fantasy football and whatnot, I think you should also consider investing and following the markets. This is essentially just following our world and the change happening within it. I think once you start you’ll find that sports are fun but just a game, and the markets have real implications on our lives and path society takes.
Most of us tech nerds are naturally contrarians
A lot of people here naturally love to take the non-obvious side of things. It’s just what we do to come up with great creative, synthesize novel ideas to grab media attention and be strong consultants. This type of mindset in modern markets is incredibly valuable as you have to learn to buy things which are out of favor or invest in a startup people say would never work if you want outsized returns. It’s likely a factor in Bitcoin’s or Tesla’s extreme performance since inception. And remember, if you weren’t in ideas like these there will always be another train and more early opportunity for you - never feel like you are missing out (and always be patient, let ideas come to you).
Stock metrics are simpler than digital Analytics
Understanding how to build an attribution model or connect data sources is fairly complex. But with investing all the data you’ll need is right within one app. You already won’t be daunted because you work on more complex dashboards in your daily life and the data isn’t nearly as accurate or real-time.
You’ll make new friends on Finance Twitter and investing social network StockTwits
Finance Twitter (for biotech, tech, QSRs, airlines, etc) is a vibrant place for conversations with smart people, as is the finance social network StockTwits. I’ve personally made lots of new friends here that I now spend time with in person too. Who knows, you might even find a business partner you create your own startup with one day.
It’s never been a better time to be a retail investor
We have brokerages like RobinHood to make $0 trades (most brokerages now don’t charge you anymore because of them - thanks to RH team for forcing their hands) access to so many trend and research tools, access to other investors and ultimately ability to make smart decisions. My employer LEX Markets even lets you for the first time own shares in individual income-generating CRE assets. There’s 100s of other great fintech startups leveling the playing field for retail investors (aka normal people like you and me without billions of dollars). The world is rushing to provide you access and for sure wants you to get skin in the game / become passionate about investing in companies and ideas around you.
Before anyone says it, I’ll end with the obvious: plan your finances and put aside a % for speculative capital to invest with. Also don’t put money in the market or startups you need right away, or do things like use high amounts of margin. These things should be obvious but I’m reiterating just in case. One other comment: I do not advise advanced tactics like day trading or options trading when you’re just starting out but you can explore them too if you really must later (still don’t please?). I’m talking about doing research and making old school, buy & hold investments you see through. That will never go out of style, and for good reason.