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Investing for Nerds: Anyone Can Be an Expert

The stock market is an ongoing strategy game screaming for some nerd-love, yet it’s dominated by old guys in suits. The object is to find the companies that are going to be worth more in the future than the market gives them credit for. Sort through the fanboys and the trolls and you can find yourself a winner. You already even have the skills. A mind for statistics? Check. An interest in at least some aspect of business? I hate to break it to you, but following blogs about smartphones and video games counts. I mean if this kid can do it, what’s your excuse?

The first thing I hear after I nerd out on someone over the stock market is that it’s too hard. “I wouldn’t even know where to begin,” they say. I tell them that everyone is an expert in some area of the business world. We are all consumers and we all have a specialty. I’m sure some of you can rattle off the iPad competitors being released in the next three months and whether or not they will make an impact in the marketplace. Dig a little deeper and I bet some of you recognize trends that your parents would kill for. Maybe you’re more interested in fashion and can tell me which mall retailers are on their way down and which are poised for success, or whether nuclear power or fuel cells are the future. These are the same questions Wall Street “experts” are asking, but you have an edge over them. While they’re supposed to be following the entire market, you can follow and read into the companies and trends you’re already interested in and use those nerd skills to set yourself up financially while also enjoying the thrill of the game.


If I haven’t convinced you that being involved in the stock market is within your grasp, then let me ask you this. When did you first hear of Netflix (NFLX)? When was it obvious to you that Netflix was quickly becoming a must-have service for your friends? Two years ago Netflix closed at $40.55 per share. Now it’s trading at around $250 per share. I was skeptical of the service when I first heard about it, but by the summer of 2009, most of my friends were using it to catch up on the first five seasons of LOST.

Along the same lines, when did you know RIM’s (RIMM) Blackberry was starting to look primitive compared to the app revolution that was happening over at Apple (AAPL) and Google (GOOG)? Even during the financial meltdown of that same summer of 2009, RIM was trading at $71 per share. It wasn’t until April of this year that the stock fell below $50 to where it sits today at just below $30 per share. If you could have said at the beginning of this year that RIM was in serious trouble, then you might have been considered more of an expert on the topic then the average investor.

I should tell you now that there is nothing guaranteed about the stock market. It is not my goal to pick stocks for you. I am just a 25 year old nerd who wants to share his passion for the stock market with his peers. It is my goal, however, through this column, to share ideas, pose questions, and develop our own nerd strategies to beating the market. If we’re going to be obsessing over a game, it might as well be one that can make us some money.

This column should not be construed as recommending or advising on specific investments.  The views and opinions expressed in this article or column are the author’s own and not necessarily those of Nerdist Industries; No endorsement by Nerdist Industries of any advice or trading strategy is implied.

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14 comments

  • @bobby b. Yeah value investing is great because trends may only be on the surface of the company with a new interesting toy but value goes deeper. Apple would be valuable stock to own because they have both (all the numbers add up and they are trending) whereas something like Blizzard Activision has some trending from their games in the nerd community but overall little trending in the investing community since their value and growth cycles might not be awesome.

    This site is a great site for value investing. It uses a lot of Phil Town’s principles for value investing. Once you know something about the numbers e.g. P/E, ROIC it makes a lot of sense. Four things about investing that every nerd should use: 1) Moat (think about a castle moat protecting a company from other companies e.g. how big a moat did Microsoft have in the early 90’s? Check out the ROIC, 2) Margin of safety, comes down to the money and how much the stock is worth vs. how much money the company is worth, think PS3 at a 80% discount 3) Management, Steve Jobs vs. Rimm CEOs 4 ) Meaning – does this have meaning to the people buying it. e.g. do you own that iphone or apps on the iphone.

    Ok. Here is a site that I love using…. If it is green you might get some green.

    http://www.stock2own.com

  • There are a couple of different schools of thought in investing. So far I have seen the word “Trend” tossed around a couple of times, but I’ve seen nothing about VALUE

    I am a value investor, and could care less about trends.

    The way I invest in companies is look at their fundamentals, work from the ground up, talk to control people at those companies. Decide whether or not these are companies I would like to own, then I buy them.

    The way I invest is about ownership, not performance. The markets will go up and down, but if you bought an undervalued stock, that really shouldn’t matter to you, because you’re only waiting for the market to catch up with the valuation.

    I only really sell stocks if I feel they are getting grossly over valued, because to not make money on that is silly. However, if I’m in a name that I really believe in (which is all of the names I’m in) I will take all the lumps it can deal out to me.

    I have been wrong, and I have paid for it, but a day with no mistakes is a day with no lessons.

  • Hi,

    Interesting topic. One that I am interested in but really does not say so much. It is also good to understand how the stockmarket works. Trending is good and most amateur investors can see that but actually knowing that the stock is valuable is a different thing since many factors like bank ownership, ROIC, P/E, ect make a huge difference in the value of a company.

    Good things about the the article is that nerd culture can find the best stocks to invest in because they understand different trends like new Applications for phones. However, you have to read into the stock market a little more besides just putting money into companies like Apple blindly. You can take a risk if you feel there are companies (like early stage Netflix) out there but your money could be swallowed whole by the demon stockmarket later.

    I recommend a bunch of books:
    One up on Wallstreet (tells amateur investors like Nerdist followers that they can see trends)
    Phil Towns book Rule Number 1.
    The Wealthy Barber (more for how to save your money)

    And my favorite website for stock investing…..email me if you want to know it.

    Some stocks that interest me at the moment that are winners…

    Apple (totally undervalued) long on
    Zixi
    EMC (shitty stock now but interesting if you are into the cloud)
    Lululemon (awesome company that makes girls bums look good)
    I had a small position on Western Digital, Activision and a pretty good position on Universal Display (PANL) in the past. I have a whole list more…

  • I went through a small investing phase in 2006 where I dropped a little bit of money into a small collection of companies who products and services I used. One of those companies was Netflix. This was just prior to their first streaming announcement and their stock prices had just taken a nasty tumble from the $40 wave they’d been riding into the $15-$20 range. The prices hit $40 again and stayed there for another year or so before they began to steadily rise to the point they’re at now.

  • Big C— Don’t reward the haters w/ a response! ignore, ignore. (But, that said, I get it)

    My first investment was in a QSR restaurant in the early ’00s… I saw a trend in Fast food getting a bit… i dunno a bit more high-falutin’. All my nerdy friends were getting into the concepts and going more, etc. So I dropped some $$ in one… and just watched it for a while, but then i got bored… and so I invested in APPL just days after the iPod came out… i remeber it was before even iTunes existed but i thought… this is CRAZY! and lucked out. Not a lot of money, just barely enough for it to be fun to watch. BUT that gave me the bug to dive into OPEN… just because it would be fun to follow. we’re talking dozens of dollars not thousands… again enough to keep it interesting but not enough to stress.

    We nerds are early adopters… and I’ve seen 2 instances where it paid off for me at least. So I keep looking, and by default learning.

    The best thing I ever read about investing was: Invest in what you use.

  • Sorrytobeofftopic: I WTF your WTF. Why post that here? Before you go off half-cocked at me you might want to use your reading skills to notice that I didn’t write this article. (bigger soap opera reveal chord) As for your yammering, “Impossible Astronaut” makes a lot more sense if you watch the shows leading up to it, without just jumping in.

    Now let’s take this off the thread here. This post is about investing and was written by Jon Trainor.

    My advice to you–and it’s fairly complex so you may want to write it down–is that if you don’t like something, DON’T WATCH IT AGAIN.

    Byenow!

  • Eric,

    The actual act of purchasing and selling stocks is very easy. scottrade.com fill out the info, fund the account, pick a stock, buy it.

    In terms of identifying trends and products, well that’s a lot trickier. you could start at a place like investopedia, or fool.com, or even scottrade has some nice primers. I think even reddit has a section on it.

    You have to make some decisions, you have to do a bunch of reading, you need to learn how to read a balance sheet, or just jump on band wagons.

    Also, ETF or Exchange Traded Funds are your friend (look up ishares and go from there).

  • I’d love to see a post on HOW to buy stocks, and also if a reader is the type who SHOULD buy stocks. I am definitely not a mainstream guy, so identifying what trends and products are going to make it big isn’t intuitive for me.

  • You’re MOSTLY right. I actually DO work in the market, and when you start to get really specialized, you rarely have analysts with their hands in more than 1 or 2 industries, and very rarely outside of 1 sector.

    We have a guy that JUST DOES paper and forestry products, another guy who just does resorts, travel and leisure companies…So it gets pretty granular here on the street, and we’re not even a big shop.

    The simple truth is that you’re right, but as a professional investor, I would urge you nerds to not put up more capital than you can lose, start sloe and safe, then move out to the more exotic and risky trades.

    Also, 1 thing to keep in mind. Psychology plays a HUGE part in every market.
    You could have done gobs of research, charting, deep value analysis found a company that is SUPER cheap, and then get crushed the day after you buy it. You’ll be all “WTF Mate, this makes no effing sense!!!@” and you’d be right. A lot of shit that goes on in the market makes no sense, but just because you get your balls crushed a couple of times doesn’t mean you can’t get rich.

    For individual investors, I would suggest buying some sort of diversified ETF, like an S&P or a Russell with the bulk of your ramp up, then make of couple of fun plays like on a favorite motherboard maker or rare earth mining expedition or something with a small part of your portfolio.

    Nothing is worse than getting blown up big and losing all of your money in 1 or 2 names.

  • Th Netflix pricing blows my mind. I realized in 2004 how awesome it was and have been a member off and on ever since. It never occurred to me to buy stock. My main problem with the market is that I feel like I need a large amount of “play” money to start (and my 401k doesn’t let me actively pick stocks only certain packages). How about an advice column that tells us how we can actually get into the market for cheap (and what cheap would be) as opposed to saying, “Remember when your ought Netflix was cool? You missed out on a lot of money.”

  • Sorry to be off topic Chris, but partly due to YOU (soap opera off chord) I decided to try Dr. Who again. The last time I watched one it had Tristan from ‘All Creatures Great and Small’. So I downloaded the first episode of ‘The Impossible Astronaut’ and Jesus Christ it was awful. Not even at attempt at coherent narrantive–he’s dead and they go straight to the casino and find him with no explanation, among many other basic ‘grammar-of-film’ goofs. What the fuck?

  • THANK YOU! THANK YOU! THANK YOU! I have been asking my friends for years if they’re interested in the stock market or if they take an active role in their 401(k) investing, and they all (huge nerds in other ways) give me blank stares as if I’m speaking in an alien tongue. Now, finally, I’ve got someone who can talk in plain layman’s terms (well, nerdly layman’s terms) about investing!

    P.S. Perfect photo choices, BTW. If I had a dime for every hour I spent playing Monopoly or reading Ritchie Rich comics…