I’ve realized that I'm not a good investor.
I mean this in the sense of stocks and the money market. When it comes to investing in other things like time and energy, I’m a modern-day Warren Buffett.
When it comes to the money markets, I’m not a good investor. I know this because I feel like a gambler. I like the odds stacked against me so I can be proven right. I’ve done this many times and have been proven wrong. This feeling sucks. Although this is not the main reason that I’m not a good investor, it’s reason enough to tell me to stop.
I’m not a good investor because I typically do know something and I’m fairly confident in that thing. But I simply won’t act on that thing until it’s too late. I wait for that idea to be reinforced by others: to allow others to realize it first and then tell me, rather than acting on it myself. This is a grave mistake in investing because if you do this, then you are too late.
I’ve realized that with my small amount of money, the only way to become wealthy is to have exponential returns. Theoretically, this can be accomplished by a number of options on the market, but it can all come tumbling down with two or so miscalls. This is a horrible game to play: you must make them all to win; if you miss a handful, you lose. I would rather play the game of making a product: investing in myself.
I’ve found that investing in myself can generate exponential returns, especially through selling software, arguably the best business model known to man: make the product once and sell it an infinite amount of times. This is known, though, which means you are competing with the smartest people on earth. Despite this, it’s not a zero-sum game, meaning I have a chance.
This is the reason I’ll invest my money into making products rather than calling options despite the intense urge I have.
Editor’s Note:
Written Feb 20, 2024: Last week I read a tweet that said “NVIDIA is just Cisco 20 years later.” It explained that Cisco was promised to be the ‘backbone of the internet’ during the late 90s and 2000/01, similar to how NVIDIA is promised to be the backbone for AI. Cisco’s downfall, per a Google search, was that they started to move into software when they were really a hardware company and made some bad management decisions (whatever that means). Anyways, their stock blew up and then fell just as fast.
A day or two later, I found out about Groq, who made an LPU (Language Processing Unit) which can generate text from an LLM at speeds that didn’t seem possible a few months ago. The LPU at Groq was created by the same guy who created the TPU (Tensor Processing Unit), aka the chip that made Google searches so fast. Now I was thinking: NVIDIA is only valued for its state-of-the-art GPUs that are used to train and deploy models, but what if LPUs are better? They very well could be. As I’ve been hypothesizing for a while: GPUs can’t be the ideal chip for LLMs. They just can’t be. There’s no way that a chip made for video game graphics happens to be the ‘perfect’ fit for AI algorithms. There has to be something better. Well, now I know there is (not sure for training, but at least for deploying).
Fast forward to yesterday: this thought is keeping me up at night a little bit, and I even looked for open positions at Groq (I’m not qualified for any of them) because I see a huge potential here. But the trader in me thought: why don’t I short NVIDIA stock? I’m calling top right now. So the question is: will I put my money where my mouth is?
Well, I have before, but it has typically felt like throwing money away, and I am already slightly leveraged to make a small amount of money if the stock goes down in the next year. But, I only ended up adding the Put call to my watchlist and didn’t do anything. Fast forward to today, NVIDIA is down 6%, and I’m considering buying more than I was yesterday. Why? Because my assumption had been reinforced. This is horrible, horrible, horrible behavior, and no good trader has ever acted like this. Hence why I wrote this article instead of pulling the trigger today. To remind myself: you’re not a good investor, stay in your lane, buddy.
Update (Feb 23, 2024): NVIDIA has risen by 20% in the past two days.