Why is personal investing a solo endeavor?

A look at how one platform is changing this for the better It was the beginning of the pandemic and I decided to add some cash to my investment account. Great, now what? A bit of background I opened a self-directed investment account almost 12 years ago, and still remember the first stock I purchased. At the time, I was living at home while working my summer job - turf care at a golf course. My dad mentioned that our neighbors worked for an oil and gas company. We briefly talked about the industry, the company, and the outlook. After this conversation I decided to do some research. I was studying mechanical engineering at the time; I hadn’t been exposed to financial concepts or taught how to invest. Figuring out where to begin was overwhelming. I did what most people would do and started Googling “how to invest” and “what to look for when investing”. I came across several online resources explaining investment concepts and describing different investment strategies. Awesome. I think I have the material I need, but is this the best way? The solo feeling As an engineer I enjoy the process of researching, learning, and problem solving. I applied these skills to learn about investing. Looking back, it was evident that a bit of help or guidance from one or two people would have improved my investing process immensely. I didn’t talk to my friends, or even my dad, about concepts I was learning or the company I was analyzing. I had a self-directed investing account, so I didn’t even consider talking to an investment advisor. At this point I felt I had found the resources I needed, but applying these concepts proved to be more challenging. I looked at a few fundamental metrics to determine if it was a stable company. Debt-to-equity ratio, current ratio, etc. I then compared these ratios to industry peers to understand the relative valuation. Based on these metrics the company seemed to be a decent investment. Again, this was my first time learning about investing and applying my new found knowledge to value a company. Then questions and doubt started to creep in. Am I using the right approach and metrics to value this company? Are there other aspects I haven’t considered? People get paid significant amounts of money to provide investment advice. I must be missing something. Ultimately, I ended up buying a number of shares in the company. While not a large amount, but enough to keep me checking the price on a daily basis over the next little while. Fast forward to early 2020 “Hey Stuart, I just found a great stock that you should invest in” It was a weekday afternoon, and I was in between client meetings. Working from home gave me a bit more time to start thinking about actively investing. Up until this point I hadn’t been paying attention my investments. The money I had saved was invested in ETFs and Mutual Funds. I was excited but also a little hesitant. “Here’s what I’ve put together” My colleague Jack went on to give me a quick pitch about why this stock was undervalued and would be a strong investment. “Great, I’m in”, I responded. I took a quick look at the company’s financials and at some of the recent filings Jack referred to. Then I put in a buy order for the stock and sat back. Two weeks went by and there was a little bit of positive price movement. One morning I woke up to this text from Jack: “Check the pre-market price”. I looked at the stock price, and it had tripled. The company had announced a significant industry partnership, and the market was reacting to the news. One of the key traits to becoming a successful investor is the ability to remove emotion when making investing decisions. It was hard not to be excited about seeing the price jump. I ended up closing my position that day. As word about the stock spread among our colleagues and friends, Jack started getting messages from people asking if he had come across any new ideas. This started to evolve into a group chat where we would share and discuss investment ideas. Watching this process evolve I had a few questions. Can you rely on one person to identify investment opportunities? Can you beat the market? These questions are hot topics and will continue to be debated. What was clear is that the social interaction within this group of people discussing investment ideas was extremely powerful. Someone would share an investment thesis and everyone could provide a different perspective or challenge the thesis. Through this process several great investments were identified. If you think about investment banks, hedge funds, and institutional investors, they all have teams of people researching, analyzing, and pitching investments. How does an individual investor compete with this type of power and knowledge? Can a social platform provide value to individual investors? Personal investing and social media A great quote by Ashley Longabaugh from Celent Research “The markets are no longer reserved for institutional investors or high net worth individuals. The goal of democratizing financial markets is becoming a reality” We have seen this with the explosive growth of online trading accounts. Participating in the the stock market is easier than ever, thanks to trading apps and platforms So now that the barrier to participating in the stock market has been removed, how do you know what to invest in? It is difficult and overwhelming to navigate the stock market as a new investor. Essentially, you are on a solo mission to learn how to invest, find quality investment information, and make profitable investments. To tackle this challenge people are using social media platforms. Investors have started to leverage traditional social media platforms (Twitter, Facebook, YouTube, Instagram, Reddit, etc.) to discuss investing. However, there are pros and cons to using these platforms as an investor. Pros Discovery — People readily share new information about different stocks, making it easy to access new investment opportunities Discussion — The ability to discuss pros and cons of investment ideas improves the due diligence and thought process. Learning — It is easier and more enjoyable to learn through conversations and engagement with other people who have diverse backgrounds and investing experience. Cons Pump and Dumps — People will abuse the power of social media to promote stocks for their own personal gain. Noise — Sifting through the noise and chatter becomes difficult when there are hundreds/thousands of people discussing investment ideas and data. Limited Information — Social media typically provide snippets of information, so it is up to you to fact check the data. I have found the pros of leveraging a social platform for investing outweigh the cons, especially if you can mitigate the cons. Ideally, there would be a dedicated social platform for investment ideas, insights, and education, one which captures the advantages and reduces the downside. How does Utradea fit in this space? When I invested in my first stock, Facebook was relatively new and Instagram had just launched. Social media was in its infancy. Here we are in 2021 and several new social media platforms have launched with niches for specific topics or mediums of communication. And now there is a social media platform dedicated to investment ideas and information: Utradea. There has been a significant societal shift in the way people search for and consume information — it’s a shift to social media. This is starting to become more evident in the investment space, where people are utilizing social media platforms to discuss investing. The problem is that most of these platforms are not tailored to investors. People enjoy interacting with each other on social media and it is one of the primary mediums for consuming information. It only makes sense that this would be true for personal investing. By placing a primary focus on social interaction, and seeking out conversations/ideas supported by quality investment data/information, people can become better investors. Accessing the stock market has never been easier for individual investors, but the quantity of investment information available is immense. I believe a social platform for investment information is the best forum for individual investors looking to become better investors. I thoroughly enjoy discussing investment ideas with friends and strangers, and I know a lot of other investors who feel the same way. As more people join the stock market, the need for investment resources will continue to grow. More and more people will to turn to social media to discuss investing and this trend will continue until it becomes the norm. The platform we built at Utradea — from the visual design and social focus all the way to our backend architecture — is guided by our vision to be the leading social platform for quality investment ideas and insights. We believe that everyone should have access to the tools and information needed to become successful investors. We can’t wait to see you on Utradea. Join the community to start discovering investment ideas and insights

Why is personal investing a solo endeavor?

George Lucas

8:35 AM

Jun 01 2021 (Tue)

Newsletter

blog post cover photo
Image credit: utradea.com

A look at how one platform is changing this for the better

It was the beginning of the pandemic and I decided to add some cash to my investment account.

Great, now what?

A bit of background

I opened a self-directed investment account almost 12 years ago, and still remember the first stock I purchased. At the time, I was living at home while working my summer job - turf care at a golf course.

My dad mentioned that our neighbors worked for an oil and gas company. We briefly talked about the industry, the company, and the outlook. After this conversation I decided to do some research.

I was studying mechanical engineering at the time; I hadn’t been exposed to financial concepts or taught how to invest. Figuring out where to begin was overwhelming.

I did what most people would do and started Googling “how to invest” and “what to look for when investing”. I came across several online resources explaining investment concepts and describing different investment strategies.

Awesome. I think I have the material I need, but is this the best way?

The solo feeling

As an engineer I enjoy the process of researching, learning, and problem solving. I applied these skills to learn about investing. Looking back, it was evident that a bit of help or guidance from one or two people would have improved my investing process immensely.

I didn’t talk to my friends, or even my dad, about concepts I was learning or the company I was analyzing. I had a self-directed investing account, so I didn’t even consider talking to an investment advisor. At this point I felt I had found the resources I needed, but applying these concepts proved to be more challenging.

I looked at a few fundamental metrics to determine if it was a stable company. Debt-to-equity ratio, current ratio, etc. I then compared these ratios to industry peers to understand the relative valuation. Based on these metrics the company seemed to be a decent investment. Again, this was my first time learning about investing and applying my new found knowledge to value a company.

Then questions and doubt started to creep in.

Am I using the right approach and metrics to value this company? Are there other aspects I haven’t considered? People get paid significant amounts of money to provide investment advice. I must be missing something.

Ultimately, I ended up buying a number of shares in the company. While not a large amount, but enough to keep me checking the price on a daily basis over the next little while.

Fast forward to early 2020

“Hey Stuart, I just found a great stock that you should invest in”

It was a weekday afternoon, and I was in between client meetings. Working from home gave me a bit more time to start thinking about actively investing. Up until this point I hadn’t been paying attention my investments. The money I had saved was invested in ETFs and Mutual Funds.

I was excited but also a little hesitant.

“Here’s what I’ve put together” My colleague Jack went on to give me a quick pitch about why this stock was undervalued and would be a strong investment.

“Great, I’m in”, I responded.

I took a quick look at the company’s financials and at some of the recent filings Jack referred to. Then I put in a buy order for the stock and sat back. Two weeks went by and there was a little bit of positive price movement.

One morning I woke up to this text from Jack: “Check the pre-market price”.

I looked at the stock price, and it had tripled. The company had announced a significant industry partnership, and the market was reacting to the news.

One of the key traits to becoming a successful investor is the ability to remove emotion when making investing decisions. It was hard not to be excited about seeing the price jump. I ended up closing my position that day.

As word about the stock spread among our colleagues and friends, Jack started getting messages from people asking if he had come across any new ideas. This started to evolve into a group chat where we would share and discuss investment ideas. Watching this process evolve I had a few questions.

  1. Can you rely on one person to identify investment opportunities?
  2. Can you beat the market?

These questions are hot topics and will continue to be debated.

What was clear is that the social interaction within this group of people discussing investment ideas was extremely powerful.

Someone would share an investment thesis and everyone could provide a different perspective or challenge the thesis. Through this process several great investments were identified.

If you think about investment banks, hedge funds, and institutional investors, they all have teams of people researching, analyzing, and pitching investments. How does an individual investor compete with this type of power and knowledge?

Can a social platform provide value to individual investors?

Personal investing and social media

A great quote by Ashley Longabaugh from Celent Research “The markets are no longer reserved for institutional investors or high net worth individuals. The goal of democratizing financial markets is becoming a reality”

We have seen this with the explosive growth of online trading accounts. Participating in the the stock market is easier than ever, thanks to trading apps and platforms

So now that the barrier to participating in the stock market has been removed, how do you know what to invest in?

It is difficult and overwhelming to navigate the stock market as a new investor. Essentially, you are on a solo mission to learn how to invest, find quality investment information, and make profitable investments. To tackle this challenge people are using social media platforms.

Investors have started to leverage traditional social media platforms (Twitter, Facebook, YouTube, Instagram, Reddit, etc.) to discuss investing. However, there are pros and cons to using these platforms as an investor.

Pros

Discovery — People readily share new information about different stocks, making it easy to access new investment opportunities

Discussion — The ability to discuss pros and cons of investment ideas improves the due diligence and thought process.

Learning — It is easier and more enjoyable to learn through conversations and engagement with other people who have diverse backgrounds and investing experience.

Cons

Pump and Dumps — People will abuse the power of social media to promote stocks for their own personal gain.

Noise — Sifting through the noise and chatter becomes difficult when there are hundreds/thousands of people discussing investment ideas and data.

Limited Information — Social media typically provide snippets of information, so it is up to you to fact check the data.

I have found the pros of leveraging a social platform for investing outweigh the cons, especially if you can mitigate the cons. Ideally, there would be a dedicated social platform for investment ideas, insights, and education, one which captures the advantages and reduces the downside.

How does Utradea fit in this space?

When I invested in my first stock, Facebook was relatively new and Instagram had just launched. Social media was in its infancy. Here we are in 2021 and several new social media platforms have launched with niches for specific topics or mediums of communication. And now there is a social media platform dedicated to investment ideas and information: Utradea.

There has been a significant societal shift in the way people search for and consume information — it’s a shift to social media. This is starting to become more evident in the investment space, where people are utilizing social media platforms to discuss investing. The problem is that most of these platforms are not tailored to investors.

People enjoy interacting with each other on social media and it is one of the primary mediums for consuming information. It only makes sense that this would be true for personal investing. By placing a primary focus on social interaction, and seeking out conversations/ideas supported by quality investment data/information, people can become better investors.

Accessing the stock market has never been easier for individual investors, but the quantity of investment information available is immense. I believe a social platform for investment information is the best forum for individual investors looking to become better investors. I thoroughly enjoy discussing investment ideas with friends and strangers, and I know a lot of other investors who feel the same way.

As more people join the stock market, the need for investment resources will continue to grow. More and more people will to turn to social media to discuss investing and this trend will continue until it becomes the norm.

The platform we built at Utradea — from the visual design and social focus all the way to our backend architecture — is guided by our vision to be the leading social platform for quality investment ideas and insights. We believe that everyone should have access to the tools and information needed to become successful investors. We can’t wait to see you on Utradea.

Join the community to start discovering investment ideas and insights

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