Venture Capital in Portfolios

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Reasons why I think it’s not sexy:

– Perceptions

– Gatekeeping (most VC’s require high minimums, the hassle of going through an advisor etc – compare this to opening a brokerage account and chucking money in an S&P tracker, all while sitting on the toilet with your phone in hand)

– Even if you do it, what are you going to be talking about? The almost non-existent financial info about the companies the VC fund invests in? Basket allocation and blend? Truth is, if it’s a hands-off managed investment – I probably don’t have much of an interest in discussing about it at length

– If you have the knowledge and willingness to get involved EquityZen and other similar platforms are doing a fantastic job at providing access to private companies

Personally, because of the industry I work in, I have very strong convictions about particular companies and every time they raise capital I try to get involved directly through EquityZen.

Lazybumm1

Private equity has been impressive lately in a low interest rate / high valuation environment. If this changes how do you think private equity will be impacted?

aredddit

The biggest problem with investing in VC is the dispersion of returns between top quartile funds, median fund returns and bottom quartile funds. On average VC is just not worth it unless you can get into the top performing funds like Benchmark. Otherwise you might as well invest in equities.

00nizarsoccer

Hi, longtime value investor: the problem is that the vast majority of investors aren’t well equipped to pick individual equities of established companies, to perform adequate valuation exercises, etc., let alone evaluate completely untested, speculative opportunities with opaque financials.

Even as much money as I have, my experience with predicting certain developments is such that there are too many variables. When I wrote my paper on internet distribution of music, nobody could have predicted it would be a small acquisition of Casady & Greene and licensing of Amazon’s one-click patent that would change the market.

So to me, venture capital is both about appetite and capacity for gambling… If you’re Peter Thiel and you’ve got a few billion dollars, you can say things like, “drop out of college and go start up a company and I’ll give you $10,000” … because he can afford to make 10,000 $10,000 bets and see 9,999 of them fail just so he gets there first to that one that actually isn’t crap.

Most folks on this sub have far, far less money and experience… so they’re really in no position to take blind bets when they are just working up to basic financial stability. I would not even begin to look at VC/PE opportunities until I had at least $500-600 million in available investment capital.

th3cr1t1c

The vast majority of VCs can’t beat the S&P500 before fees. After fees, the numbers look really bad. Unless you can get your money into the very best firms (like Sequoia, A16Z, etc), then there’s no point in trying. The whole VC game is a pump and dump, and the most important thing is being one of the best names, because the lemmings will follow big names regardless of what they invest in. So long as you manage to cash out before the crash, you should do fine.

plz_no_ban_me

Daily Advice Thread – All basic help or advice questions must be posted here. September 27, 2021

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Hi, Im 13 years old and i would like to start learning how to invest.

I heared that there are some platforms for begginers to invest but not in real money what is the best platform? I prefer free one. And is there some good tutorials about how to start investing? (I know the idea of investing but i never actually did it)

Tasty-Day-455

I’ve heard mixed opinions about whether I should dump all my money into a 401k to get max tax leverage or just meet the 6% match my employer offers and put the rest in my brokerage account from there. I’ve set aside a sizable sum into my brokerage account to offer liquidity for unforeseeable circumstances or future large purchases. I consistently beat out my 401k by 3%-5% the past 3 years, but the tax deferred gains would still beat that out correct? Maybe start positioning my brokerage account as a hedge, but allocate a majority of my resources to the 401k?

Consciencekills

If I had the option to buy similar stocks, with similar performance, but one’s price was half as much as the other, which is the best option?

SCHB and VTI are almost identical except in price. SCHB is roughly $100 while VTI is around $200. Wouldn’t it be better to own 2 shares instead of 1 when these ETFs are practically the same?

sayitaintsooh

Hi, I plan to buy a car in 6 months. What should I invest, to have no surprises when I need the money?
I’m an EU investor, already diversified between stocks, local inflation-linked bonds, commodity and precious metals. I have a moderate risk tolerance.

I was thinking about buying some TPIS ETF, such as IE00B1FZSC47. How does a typical TPIS ETF behave, when FED decides to finally raise interest rates a bit?

Candy6132

Hello, just starting investment and found few stocks that i like. Just wondering how to evaluate their buy point, is that has something to do with the support level? Thank you!

daddyforce69

Switching to a Small-Mid Cap fund in my annuity.

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I always go back to the 500 as a basis. If you aren’t beating the 500, then just be the 500.

Nuclear_N

The risks to small cap is that you should expect much larger drawdowns and more frequently than a total market or large cap portfolio and so would need a higher risk tolerance to avoid selling at the bottom. The risks to small cap growth is that historically growth has actually underperformed value over a very long period, but the past 3 decades have shown growth can outperform for a long time as well. You should expect a longer period of underperformance or outperformance, instead of the steady growth of a total market. If you don’t know much about finance, I would not switch around portfolios too much, because there will always be something that you didn’t take into account.

I personally dislike all target date funds because they are tailored for the most average person and to get the best performance for the most average of financial situations. Not to mention often target date funds have higher expense ratios than even many aggressive stock funds. TRRMX’s ER is higher than FMGGX. So it depends on your personal financial situation whether you want to use these. If you expect to have a slow and steadily higher income in the future as you approach retirement, then these funds are made for you. However they don’t take into account how much more massive your earnings potential can be compared to your early working years. For example, if you have a great in demand skill, you can blow up your portfolio with tons of leverage many times when you are young and it wouldn’t really affect how much you have during retirement because the vast majority of your earnings will be in the future, see life cycle investing. They also don’t take into account any inheritance or windfall or any spending behavior. If you expect any inheritance or have any lower spending preference, then your risk tolerance even near retirement can be very high so it might not make sense to even have any bonds at some target date.

tachyonvelocity

First off, never invest in annuities.

waitwutok

Stick with target date funds. You have all your eggs in one basket now and a market correction or multiple market corrections will not be your friend. If you wan to do your own thing learn asset allocation based on age with large, mid, small (maybe), bonds, and international. Honestly target date funds make the most sense for most folks, just pick a low cost one like Vanguard. Also American funds has a great TDF even the the expense ratio is slightly higher than Vanguard.

techbro78

Good on you for looking at your plan. I just did the same. I was in a very conservative retirement fund last 4 years. Also in the trades. VTI or similar would have doubled my money. Not financial advice.

LISTENTOKATEBUSH

Let’s talk about reasonably good returns along with limited drawdown

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NTSX is what you’re looking for, leveraged 50% to 90/60, low expense ratio, already leveraged so margin isn’t necessary, you can use margin to adjust what you want, more bonds, more inflation hedge, etc. on top of the already balanced portfolio. TLT and treasury bonds are fine, but not right now. The fed has a plan to reduce bond purchases and is telling you they will raise rates. Buying long bonds right now isn’t a good idea, you will underperform for a few years until bonds stabilize to pre-pandemic levels

tachyonvelocity

look into the Harry Browne permanent portfolio and Golden butterfly

HallowedGestalt

Watch at those rates they keep moving upwards all the high valued tech stocks are gonna start to collapse!!! They are correlated

pdieff

Backtesting can be dangerous. I don’t think that SCHD and TLT can keep going on like this given how good a run growth has had and how low the 10-year rate is now. How would this have done during the .com bust? During the Volcker rate hikes? 2012 to now doesn’t even include a good recession.

TurtlePaul

My broker TastyWorks doesn’t charge you for margin untill your cash balance/buying power is negative. It’s weird because I called them one day to try and figure out how much interest I need to pay but they stated that I am not using margin (so not being charged any interest) unless my accout falls below a certain cash number. When you’re account is above 150k you apply for even more (pre margin/levarage? I don’t even really know what to call it) buying power where you can sell naked puts or buy stocks/option with less drawdown to your buying power. For example, I can sell a put on Amazon and my buying power only goes down about 50k but theoretical I should have ~$340000 to sell this without margin since if by the super unlikely chance Amazon goes to 0 that’s how much I need to pay.

gabrielproject

Investment in RISC V processor ecosystem

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Isn’t the whole point of risc V being an open standard and therefore there is no specific company in particular profiting from it?

doctorzaius6969

>How is a common person able to directly or indirectly invest in such companies?

If you’re targeting early-stage startups in the semi industry, beside being F&F of founders your best bet would be having enough $ to be an accredited investor so that you can participate in angel syndicates & VC funds. The latter would probably require you to be a high net-worth individual though, so that does shy away from the qualifier you stated. My university has an alumni group that does just that.

There may be some publicly traded firms that invest in startups near IPO but that’s usually not very common.

bigchungusmode96

WD has one of the few open source RISC-V cores written in SystemVerilog.

editviewgo

Thanks for the question which is leading to a healthy comment discussion.

Right now the chip shortage is because of supply disruption (factories closures, demand went up, labor shortages) and it’s prohibitively expensive to set up a chip factory (ya outsourcing).

While I gather companies who developing embedded systems would benefit given the current chip shortage and lessen the burden on external sources using RISC V technology (basically open source)

Unless they are building their own factories which unfortunately is not perfect as chip designs will change / improve regularly. I fail to understand where is the MOAT for them.

sin94

I’ve been hearing about the impending rise of RISC for 20 years now, yet we are in an ARM and x86 world.

Don’t get wrapped up in this.

mdmarra

Who’s betting heavily on Electric Vehicles?

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A warning from experience: just because a technology is taking over, it doesn’t mean that investments in that industry will be profitable.

My example is hard disk drives. Hard drives were a huge, booming business in the 80s and 90s. Everyone needed more space to store stuff. But there were also a dozen companies making hard drives. Competition was fierce and those companies were not making a ton of money.

Western Digital, one of the survivors, went public in the early 80’s and ten years later you could buy the stock at half the IPO price.

I think the story is similar with cars 100 years ago. There were dozen of auto manufacturers and most of them eventually went out of business.

ron_leflore

I work in this industry. Be sure to perform your due diligence for any individual company you’re thinking of investing in. We’ve been in the middle of a hype storm for years and it’s allowed a lot of snake oil startups to flourish. Even the big boys are being taken for a ride, see GM and Nikola. I do think this market will see explosive growth at some point relatively soon, but there’s going to be a culling before then.

As a starting point, I’d recommend researching current and prospective battery and electric drive technology. Some cocktail napkin calculations assessing claimed introduction date and claimed performance is largely adequate to determine if you’re dealing with bright-eyed optimists or serious technological innovators.

Edit: I want to add that the serious guys will have a plan they present for the entire ECOSYSTEM in which their vehicle will operate, not just the vehicle itself.

FrumiousBanderznatch

Electricity is a fad. Cars are a bubble. Oil is for suckers.

I’m long on horses…. they’re coming back.

PresterJohnsKingdom

Teslas already valued more than every major auto maker combined with a 500+ pe ratio. I think youre a little late to the party OP.

civic19s

I definitely look at them as a rich kids toy still. The price of a Tesla 3, without any EV rebate is at minimum at least 50%(if not 100%) more than its main comparable cars like a Toyota Corolla which can be purchased for about 20-25k. Granted that is the upfront cost, and there are some minor gasoline and maintenance savings over the life, but not nearly enough discounted back to make it vastly cheaper.

I’d prefer you edit your post with these calculations you are doing “showing” this so we can have a better conversation about those assumptions you are making, and what’s driving them.

CarRamRob

Is the market underestimating the odds of a US default in October?

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Edit2: unsurprisingly, we once again will have to lock this thread due to rampant rule violations. Please report overly politicized comments you see below. If you would like to continue your political arguments please go find a thread on a more political subreddit. In the immortal words of semisonic, “you don’t have to go home, but you can’t stay here.”

This thread has been locked while we clean up the rampant off topic/non-investing related discussion. A reminder that all non-investing political discussion and debate here will result in a 60 day ban. Please take those discussions to other subreddits that are dedicated to those topics.

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edit: The thread had been unlocked.. Please review our political posting guidelines below before commenting on this thread. If you see something overly political, please report it. Do not respond with further political argument.

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>Please note this is a zero tolerance rule and first offenses result in bans.>You are free to express your opinion so long as it is related to investing, you put effort in to it, and it’s civil. We’re not here to stop the free flow of discussion or ideas but we are here to keep discussion surrounding investing and civil.>Tied to investing: this should be pretty straightforward but we are laying it out here anyway. Investing encompasses markets, economic impacts, corporate profits, shifts in the yield curve, the federal reserve, taxes, potential government spending that may impact your portfolio.>Investing does not encompass immigration, personal lives of politicians, social issues, climate change(unless specifically within the context of impact to energy or similar), how you feel about a particular news organization’s potential biases, etc. If it’s not in the first list it’s probably not investing related. Making comments pertaining to non investment related politics only serves to drive the conversation off course and create a thread that is indistinguishable from one in a political subreddit. Driving conversation off topic in high level comments by bringing up politics in unrelated threads also falls in this category.>Your post should be something like “I disagree/agree with [ABC person] because [policy] will do XYZ which is good/bad for company blah blah blah blah”. If you are unable to express an investment related position on a topic without insults and memes then you probably should just go to a political subreddit and comment there.

guitmusic12

Haven’t we all seen this movie a few times? Happens. Every. Time. If anything, I hope we have a nice pull back to correction levels.

programmingguy

No

Big-Language-5357

Can you underestimate 0%?

Blackstrider

A default will never happen. I kind of hope the market dips out of fear… BTFD.

AlertConsideration95

$EAR drops nearly 52% AH on news of DOJ probe

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This is why you never invest in US stocks, can’t trust the books.

FairCityIsGood

Wow, even before this big drop they were in a death spiral. This was at $75 in February.

_BreatheManually_

Stock has been shorted to shit for months. And they seemed to bring all marketing and communication to a sudden hault. Would not be surprised if they were up to some shady practices

Three-OneLmao

Buy the dip?

BerryJeep

The CFO there is some heavyweight. Doubt he would stand for a fraud.

magadget

Ford partners with battery recycling and materials startup Redwood Materials amid EV push

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By the time they go public it will be overpriced. Shame

Mylanisko

If you’re looking for an EV recycling play, look into LICY. One of the most efficient recycling operations with a good network of hubs.

Rancidcoleslaw

Do you have a position and if so, what is your price-target?

1998casper

they should have begged Lucid to partner with them

yosefappstate_2022

If the idea is to save energy, the EVs will need the batteries to power them.

ladidaMrFrenchman

Imminent China Evergrande deal will see CCP take control

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A giant company isn’t bailed out; it’s broken up into smaller ones; investors and creditors are protected. This is actually a great outcome for everyone: investors; the market; and creditors

pearli

Sounds more like a Fannie/Freddie Moment than a Lehman Moment.

RomulusAugustus753

Why is it always worded as the “CCP takes control” rather than the government? We don’t do this with any other country in the world, even single-party states.

And when you word it as the government takes control, that’s not really an unusual or shocking conclusion. It happens all the time, even in the US.

hmunkey

Any westerners getting burned by this should’ve thought twice about trusting the CCP.

Thebesj

Of course China doesn’t bail out the company directly, it’s antithetical to the party’s ideology

dr3amb3ing