Our flirtations with stocks
Our very first experience with investing was through individual stocks as we had access to apps that made trading them so easy.
It didn't end well. Thomas had the genius idea that lots of people would want to buy FitBits as Christmas presents for their family members. He purchased their stock on November 4th 2016. Two months later, on January 5th 2017, it had dropped 40%. Quite the wake-up call.
On his side, Yoran bought shares in Dropbox when they went public in March 2018. He had used Dropbox from when it was first released. It was a good product that he used daily. And reading through the S-1, he was convinced of the founder's vision. So it had to be a good stock! Five years later, the stock is roughly at the same price. He still checks on it daily, waiting for his opportunity to sell.
Through these experiences, we learned a few things:
- It's all fun and games until you lose. You think you're a little Warren Buffett when you win, but rationalise and blame "external factors" when you lose.
- It's mostly luck. We simply don't have an edge over the thousands of other investors across the world.
- It takes a lot of work to do well. It requires more than reading one quarterly report to make a sound investment decision.
- It's an emotional rollercoaster.
There had to be a smarter way, where we wouldn't be so reliant on luck to get a return. That's why we're now steeped in passive investing and created Curvo.
The problems with picking stocks
Competing with the best
It’s tough. Remember that you are competing with all the other investors in the world who are looking for the same bargains. This includes top analysts at investment firms, hedge funds and banks, who are being paid to spend their day researching companies and industry reports. What’s your edge over them?
You have to properly research the companies that you’re investing in. This takes a lot of time and effort.
Even experts don't beat the market
You may want an “expert” to invest for you, which is called an active manager. But it’s been proven, year after year, that active managers consistently lose out against passive investors... and guess what, they cost a fortune too.
It's not all that bad.
Don't take our negative tone as the gospel. Picking stocks can work well for some.
Potential higher return. If you had bought Apple shares ten years ago, you would have made an enormous profit!
Excitment. Emotions rise when your stocks go up in value.
Great as a bonus. People have success (and fun!) allocating a bit of money to picking stocks.
Invest in companies you love. Choose your favourite companies.
Make a quick buck. Some stocks go up spectacularly in a matter of hours or days. If you time it well, you can get substantial returns very quickly.
Passive investing as a smarter alternative
Rather than picking individual stocks such as Dropbox or Apple, index funds are a way to buy the whole market, across all sectors and regions of the world.
Essentially, you own a small portion of thousands of companies throughout the world. Instead of betting on a particular company, you are placing a bet on the global economy.
Your investments are diversified, have a lower risk and a more consistent return than when picking stocks individually.
Passive investing is a smarter way for long-term investing.
Why a passive
investment approach makes sense
You need to be focused at all times to be successful.
Sit back and watch your investments grow as they follow the world economy.
What's your advantage over all other investors?
You're aware that diversification wins in the long run.
Do you want to spend your weekends trading and reading quarterly reports?
Set up monthly contributions, sit back and spend your time on what matters to you.
Learn to nurture your emotions.
But we see it as a smart thing. We strongly believe that good investing is boring.
Are you the next Warren Buffet? If so, Curvo is not for you!
You'll invest in thousands of companies rather than a select few.
You may earn an instant return if you time it right.
Compounding your investments over many years leads to substantial returns.
I’d say there’s a much better use of your time than sitting in front of the computer screen and trying to trade.