Finance Fridays - Issue #19

Ben Felix’s Investing Lessons, Predicting vs Preparing, Entrepreneurial Software Engineers

Author

Seyi Agboola
May 31, 2024

#19 - Finance Fridays - Ben Felix’s Investing Lessons, Predicting vs Preparing, Entrepreneurial Software Engineers

This is my journey to financial freedom through learning more about personal finance. Expect curated content on personal finance, career advice and entrepreneurship in less than 5 minutes.

*This is not financial advice, just me brainstorming about things related to money. Stocks are extremely volatile - value can go down as well as up. All investments and income streams may be subject to tax.

Contents:

  • 💡 Idea of the Week - Time Capsules on Reddit and Predictions

  • 🥗Side Hustles - 5 Passive Income Ideas I found on /r/AskUK

  • 🎒Useful Resource - 3 Business Lessons from a Software Engineer

  • 💹 Investing - Ben Felix's Investing Lessons

💹 5 Investing Lessons from Ben Felix

1. You're not smarter than the market.

You need a damn good reason to act as if you are. For example, ask yourself why are you aware of this piece of knowledge instead of the professional investors who are paid to know this?

2. If it's public information, it's already priced in.

Unless you have a unique take on it. For example, I have shares in SONY because I think video game IPs will take over Hollywood. Only a gamer with a deep understanding of the potential of video game IPs (like me) would feel this way vs a financial analyst looking at SONY’s balance sheet.

3. You have to be willing to take more risks for greater returns. 

Anyone or anything promising low risk, high returns isn’t giving you the full picture and you should be sceptical. Typically in my opinion, that’s anything above 10% returns which is similar to investing in the stock market.

4. Anyone can get lucky in the short term. 

Long term success is from a consistent process. For example, S&P 500 has outperformed the market by sticking to the same strategy of the top 500 US companies. I can trust it will continue its success because I understand and believe in the process of selecting and replacing the top companies in the index. Unlike crypto memecoins I cannot tell you how certain coins perform better than others.

5. Investing has been solved. 

The mantra is buy the whole haystack. Which makes you think, so why do people invest in individual stocks at all? Because 10% returns aren't good enough for many. Personally I want more than 10% returns so I will use investing to combat inflation whilst looking to other avenues to increase my wealth.

🎒3 Business Lessons from a Software Engineer

This software engineer created 23 websites which made varying amounts of money. These were my key takeaways from his entrepreneurship  journey.

1. Most successful business owners failed before they succeeded. 

This software engineer created 15 websites before making $379,000+ which made up over 67% of his total revenue across all these websites. 72% of Warren Buffett's $378 Billion Portfolio are invested in just 5 stocks. Look at any entrepreneur with multiple businesses, they make the vast majority of their wealth from 1-2. So keep experimenting and you’ll eventually land on something game-changing.

2. Simple ideas are lucrative. 

Most of his websites were simple interactive landing pages. With the growth of no code solutions and AI there's less of an excuse to not create small, novel solutions to niche problems even without coding skills.

3. He sold some of his websites for relatively small amounts of money. 

Buying websites with a plan to monetise them further might be an alternative investing strategy to consider. Especially if your savings is now no longer enough to buy property and you want more than the 10%-ish annual returns from the stock market. 

Just Googling, I came across Flippa, SideProjectors, Acquire, where you can buy profitable websites for as low as £5000.

💡Reddit Time Capsules and Predicting the Future

I went down a rabbit hole of this /r/Games time capsule of predictions. And it really solidified the idea that humans are very bad at predicting the future.

This makes investing in individual stocks really hard. So how do we make the right bets that lead to better financial outcomes? These are the 3 things I try to remember when it comes to predicting the future in regards to investing.

1. Predicting change is hard, preparedness though is more easier (word to Morgan Housel) and can just be as lucrative.

For example, you can invest in AI companies - which is actually predicting which individual companies will profit from AI. Or you can invest in protecting yourself from AI taking your job by upskilling - that would be classed as preparing for the upcoming AI trends.

2. Some things stay the same longer than you think

Predicting change is exciting but like Jeff Bezos said - what about what won’t change? People will always want to eat, sleep, drink, play, be popular and have sex. Investing in and around industries that support never changing themes is good risk mitigation.

3. Being THE change is a safer bet than betting on it

You can’t control when a CEO of a company you’re invested in leaves unexpectedly but you can control your own business.

🥗5 Passive Income Ideas I found on /r/AskUK

✍🏿Quote of the Week 

“The best investment strategy is one you can stick with”