Wednesday, January 1, 2014

I am Investing by Accident and So Can You!

There’s an elephant in the room and he is not wearing any clothes. Let’s just talk about this right up front: does it really make sense for you to take financial advice from a blog called “Investing by Accident”?

Well, good news folks! The experts say that the experts are very bad at managing money. Don’t believe me? Take a look for yourself: Only24% of Active Mutual Fund Managers Outperform the Market Index.

This is great news because using of the powers of backwards logic, it stands to reason that if “most experts under-perform the market most of the time,” then certainly, “all non-experts should out-perform the market all of the time.” Although, I’m not an expert in backward logic, so maybe it would be more correct to say that “no non-experts could out-perform the market none of the time.” I’m not sure, but either way you figure it, it certainly stands to reason.

If so, there is no better person to give you money management advice than me! Here is the short list of my extensive qualifications at being not-an-expert:
  • I have a B.A. in Computer Science, an M.A. in Biblical Studies, and I work as a Program Manager for a software company. Basically, this means that I am eminently qualified to describe how someone else could write a computer program with a user interface in biblical Hebrew. (“Behold! A reboot is upon you!”). I have no professional qualifications in finance other than the summer I worked at Goldman Sachs as a geek intern before my senior year in college. For the purposes of this blog, I will refer to this time in my life as, “the time I spent on Wall Street.”
  • I lost $20,000 during the dot-com bust by investing all of it with one company because I thought they had a great product. They did not.
  • A few months after I made aliyah, I saw this headline in the paper, and I thought it meant that “one person of the nation is altogether sad”: כולם באחד העם עצובים. I knew that was ridiculous, and I am fairly educated person, so then I figured that maybe someone had stolen Asher Zvi Hirsch Ginsberg’s pen-name only to become sad because he now had a weird name. That didn't really sound newsworthy, but who am I to judge Israeli standards in news? Anyway, it turns out that אחד העם is actually the name of the street on which the Tel Aviv Stock Exchange is located. Apparently, they were sad because their street has a weird name. Or, something along those lines.

You may wonder: if I am such a non-expert, then why write this blog? Why not use my power of non-expertise and do what the experts suggest: go back in time to 2002 and invest all of my money in a passively managed US Mid-Cap Growth stock index? I wish I could, but that would mean that I would be making aliyah all over again six years later, and I’m still recovering from the first time around.

Also, I figured that if I already have gone through all the pain of figuring out how to invest in Israel, I may as well share the information so that other people can benefit. I guess that is what the financial gurus out there would call, “leveraging” my experiences for your benefit. Or, to say it more simply: I believe in the power of people helping people, and I present this blog for what it’s worth – one non-expert to the next – to help olim navigate a mostly foreign, but not altogether ridiculous, financial system.

How does such an unlikely non-expert become the first Investor by Accident? I will tell you the story.

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