FLUCTUATING TIDES
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Tidal River Investments positions the day after the first show airing:
Nicholas Taleb discussing his book Skin in the Game at Google Talks: https://www.youtube.com/watch?v=uv6KLbkvua8
Indexing vs. Passive Management and the cost of fees: The Vanguard Study: https://personal.vanguard.com/pdf/ISGIDX.pdf The S&P scorecard on active funds vs. passive (SPIVA) Overview: https://www.spglobal.com/spdji/en//documents/education/education-spiva-scorecards-an-overview.pdf and the recent 2019 study: https://www.spglobal.com/spdji/en/documents/research/research-risk-adjusted-spiva-scorecard-year-end-2019.pdf The Motley Fool, a financial blog common to Buy and Hold investors that I’ll mention often: https://www.fool.com/
Some books that I enjoyed by the Motley Fool team:
And some related books investing books that I found helpful:
Robert Brokamp (“Bro”) and Alison Southwick meet with Sean Gates, a Certified Financial Planner with Motley Fool Wealth Management, to discuss financial advisors and potential conflicts of interest: https://www.fool.com/podcasts/answers/2021-06-22-when-and-how-to-get-financial starting at 6m15s
Photography from Tidal River Investments can be purchased at https://tidalriverinvestments.com/
Welcome to Fluctuating Tides, the Podcast, Episode 1. I’m your host, SomeCodingGuy, and boy have we got a lot to talk about.
I’ve gotten a lot of questions about investing over the years, so I thought I would share my best knowledge about the topic with you, for free, as in… well, free.
For as long as there’s been money, there’s been someone telling you how to get rich, quick. I’m not going to do that. I’m going to tell you how I beat the market for about 20 years, and how I think about stocks and investing. There are a lot of roads to wealth out there, but given how much nonsense I’ve seen on the internet lately, I don’t think there’s been a better time to join the discussion.
Over the course of this show, I’m going to give you the ways I think about these things. I’m even going to use simple math, just your run of the mill multiplication and addition, maybe a little division if we get crazy. You don’t need fancy models to understanding investing, and believe me, no one I’ve ever met or read knows what the future holds, other than “it will fluctuate”.
Most importantly, I’m going to put some skin in the game, like Nicholas Taleb says. This isn’t a financial show full of pundits talking about stuff they don’t own or pumping stuff they do - I’m going to trade a real money portfolio right in front of your eyes, and I’m going to put my money where my mouth is. In a couple years if I’m not consistently beating the index, I’m just going to buy the index and be happy. I don’t have a get rich quick scheme to share, it’s going to take some time, but I’m going to try my best to do it right here, live. To that end, and after a mountain of paperwork, I opened up a company for this show called Tidal River Investments, which I’m going to use to do these trades. Tidal River is also into photography, but we’ll get to that later.
I’m going to do something more important than analyze stocks for this first show - I’m going to talk about the index, because if there’s one thing to take away from this show, it’s that the overwhelming mass of professional traders are going to lose to the stock market. What do I mean by that? If you built a single number to describe the 500 biggest companies in the United States (like, say, the S&P 500) or just about every publically traded company out there with readily available prices (like the Wilshire 5000), we’d call that an index, and the index itself is going to beat the professional money managers almost all of the time. Like 80-90% of the time, after you take out fees, according to research from places like Vanguard, S&P, the Motley Fool, and others I’ll link to in the show notes. I keep investing in individual stocks because I keep beating the index, but I can tell you, I also own some index funds, and given how well they do, I’d be happy ending this entire series right here just saying that. Anyone who can tell you the future had better be an oracle, but over the next few years, I’m going to try my best to continue to beat the index as transparently as I can manage.
There’s tons of information about low fee index tracking mutual funds and ETFs - an ETF is basically a mutual fund that trades like a stock. For this show, I’m going to use the Spyders ETF (symbol S P Y) since it’s very easy to trade and to get information about. But please do your homework before buying anything, one thing I’ll talk a lot about is if you don’t understand what you’re buying, you probably shouldn’t be buying it. I’ll measure what I’m doing against this index to keep score.
Fees, by the way, kill your returns. Make sure whenever you’re buying a fund or an ETF you research what the fees are, and believe me, they vary all over the place. I used to have an index tracking fund from a company I won’t mention and boy, when I saw what they were charging, I dumped that fund real fast and opened a better account.
My goal is pretty much the same as the Motley Fool’s mission statement - to make you “smarter, happier, richer”. I’ll recommend some books I enjoyed by them and some others in the show notes, but to answer the question of people who ask me what my general investing strategy is, I’m in the buy and hold camp - I like to buy shares in companies that I’m going to sit on for a while, in the hopes that I’m buying a dollar for 50 cents, as Buffett and Graham like to say. I’m not going to trade much in the real money portfolio, and people in this camp generally think that the best time to sell a stock is never, because it just keeps going up. Granted, we all have bills to pay, so forever might be just 5-10 years, or sooner if required. Depending on how the portfolio I trade here, I have a bunch of ideas with what to do with the money, something I’ll outline in full on the Tidal River Investments website.
Before we dive in on this journey, and to be as straight talking as possible, let me tell you what I invest in now, as of the start of this show. I’ll be talking in greater detail about why I bought these things when we start doing some detailed analysis of stocks I like, but I want to be up front with you about what I’m in right now. I own shares of Netflix, ticker NFLX, a company I worked at for about 6 years, since I thought it was best stock I’d seen in years and I totally disagreed with almost everyone in the investing world about its future 6 years ago. I own shares of Amazon, ticker symbol AMZN, because ever since I bought my first books there, I thought they were awesome at on online retailing, and I bought shares of Etsy, ticker E T S Y, just a few months ago, because I view it as a great companion holding to Amazon, specializing in the kinds of goods that Amazon just hasn’t figured out. I also have an account handled by a high school friend of mine that I can’t place trades in, and since I don’t want to give away his own knitting, and I don’t check it very often, I’ll leave that out of the picture. I’ve also got shares of some broad market indexes, but since that’s not individual stocks and we already talked about the index, I’ll leave that alone.
Like I told you, I started Tidal River Investments to place real trades with this show. Tidal River currently uses Ameritrade as a brokerage - they’re not paying me or sponsoring this show, I’ve just had good experiences with them over the years. Oh, and they allow brokerage accounts for LLCs like Tidal river.
To get started, I put 2000 bucks into that account to use for trades and so you know I’m serious. While I’d like to buy shares in the three stocks I just mentioned, Ameritrade doesn’t let you buy fractional shares, so for now, I’m just going to buy a share of Netflix and Etsy, since one share of Amazon is more than the total value of the account today. I’m also going to put 100 bucks into the account for every one of these podcasts, to show you the power of regular contributions for investing.
Aside from supporting the show, Tidal River’s business is selling photos. As those of you who watch my Twitch stream know, I just recently drove around a good part of the US, exploring and taking photos, and these are the goods that I’m selling on the website. To get going, I put the first photo from Series 1 on tidalriverinvestments.com. Embedded in it is a cryptographic signature and one of six random puzzle pieces. That’s it - that’s the ONLY crypto you’re going to hear me advocate. It’s not an NFT, it’s not bitcoin, it’s nothing sexy like that - it’s just a good old fashioned digital signature, and it’s included in the metadata.
That’s how Tidal River makes money - selling photos and investment returns, so in case you’re wondering, for right now, that’s it. I cover all that on the website too, and as you’ll see in future episodes, I think it’s pretty important to understand how a company makes money. Don’t feel obligated to buy a photo, either, I’m just telling you what I’ll do with it if you do.
One last note, Tidal River Investments and I are not financial advisors, market analysts, or otherwise in any way offering advice for or against any of the securities discussed. If you want solid financial advice, meet with a financial advisor, preferably one that’s certified and operates on a fee basis - I’ll link to a discussion from Robert Brokamp at the Motley Fool on this topic in the show notes. Stocks and funds may not be good investments depending on your financial situation, and that’s something that an advisor could help you with. Also, if you’d like to chat about stocks, feel free to join the discord.
We’re here for learning, not advice, and I wish you the best on your financial journey, and remember, tides fluctuate!
2021-08-18 00:00:00 +0000 UTC
