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My name is David, and I'm a geek (cue the crowd, "Hi, David")

 

So what does that have to do with investments? Basically, it shapes my whole approach to how I look at companies and products, and how I invest (when I have the money.)

 

Geekdom isn't really about knowing the most facts, or knowing the most obscure information; at it's heart is the desire to figure out how it really works. A geek may end up making a doomsday weapon and then saying, "What happens if I do this?" But if you look into the back of his lab, office, den, or garage, you'll find a big pile of dismantled equipment, representing hours and hours of taking apart other doomsday weapons to see how they tick. For every minute spent on building a might-destroy-the-world-or-might-make-a-good-cuppa-joe machine, the true geek has spent hours reading about, tinkering with, and pulling apart something else.

 

So, you may ask, what does this have to do with money and investing? And I would answer that a someone with this frame of mind will put his money (or at least his opinion, as on CAPS) where he thinks he knows at least the general lay of the land and is excited about the possibilities.

 

Being more technically minded (computers, software, and devices), that's why my selections and investments are mainly items like MSFT, RHAT/RHT, SUNW, IRBT, IO, and others. Because a geek may also believe that others live or think like him, I also put my money in IGT (not a big gambler, but I really like the slot machines and I'm impressed with how they are put together), FDO and DG (gotta find those Ramen noodles somewhere.)

 

It's also why I stay WAAAYYYY away from complicated ecosystems like investment companies, banks, insurance companies, real estate, and commodities. Too many variables, too many human-elements going on in the background for my taste. Yeah, I could try to put my mind to it, but that leads to the dark side of the equation.

 

Geekiness also has its price: When you think you've "figured it out" or "see the possibilities," you tend to minimize, ignore, or discount what you don't know. "Sun Microsystems has some great software and hardware products; I'll buy it!" Not realizing that thousands/millions of other investors have a greater vote in how they feel about the company. Just because I believe in a corporation, its products, and it's possibilities, doesn't mean anyone else does.

 

Same goes for RedHat. In my opinion, RedHat is so overwhelmingly embedded in the Linux and OpenSource movement that it is very, very unlikely to disappear this decade. But the recent bad news has scared off other investors, dropping the price and causing a loss to anyone who bought it even 3 months ago.

 

And that's the entire point. When you think you've got a handle on it, you jump in and try to beat the crowd. But you've always got to remember two things: 1) You don't have all the facts. Just because you might believe you've got it all figured out, doesn't mean you do. And 2) Even if you do have the facts and the workings straight, doesn't mean that everyone (or anyone!) else does. You're just as vulnerable to market forces (or herd mentality) as anyone else.

 

The way for geeks to deal with the downside is to do two things. Keep looking at all the facts at your disposal (including new ones) and never discount new information just because it doesn't fit your beliefs/wishes/SWAG.

 

And never forget that investment is like a pro-rated democracy. Unless you have the cash to buy out a company (and you probably shouldn't be listening to my advice anyways), your vote-investment is a very small percentage in the overall system. Stocks fluctuate according to what the every voter-investor is feeling...

 

...and the polls never really close.

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