3 ms·

As a sofware engieer I disagree: most software engineers have an edge over dumb analysts in analyzing companies, like Amazon / Apple / Tesla / Google / Walmart

As a sofware engieer I disagree: most software engineers have an edge over dumb analysts in analyzing companies, like Amazon / Apple / Tesla / Google / Walmart / Bitcoin / Ethereum / Goldman Sachs. We may not have a deep understanding in the balance sheet, but being able to read the code, APIs, and protocols (SWIFT vs BIPs, lightning protocol, cryptography books, testing infrastructure for example) we can see and understand how well products will work years in advance. The trick is to go deep into technical details.

rmah 5y ago
Engineers may have an edge in analyzing company products. But that's not the same as analyzing the company. Not understanding the difference has burned a lot of investors in the past.
- xiphias2 5y ago
  Can you give recent examples of investors overestimating public tech companies with great tech? In the private market we had Theranos, which was completely opaque, but most of the big public failures were business innovations with unimpressive tech, like Groupon and WeWork.
nine_k 5y ago
You should not underappreciate the subject area expertise of people who analyze stocks in a particular business area. Many of them learn the subject area at a serious depth, exactly for the reasons you state: the balance sheet does not tell the whole story.
- astrange 5y ago
  Being a serious researcher is only good for stock picking if everyone else is going to come to the same conclusion, just more slowly. This is not true recently, what does meme stock performance have to do with serious peoples' opinion on Tesla? Actually, value investing hasn't worked for a lot longer than that, and it's probably because everyone else can see what you can for a public stock.
  - nine_k 5y ago
    Knowing the meme environment is a part of the subject area knowledge :) I mean, understanding a bit about CPU architectures and chip production processes is needed to e.g. choose between INTC and AMD, and some knowledge about cell structures and mRNA is needed to decide whether to invest in MRNA. This knowledge is important, on top of understanding the balance sheet.

rmah 5y ago

Engineers may have an edge in analyzing company products. But that's not the same as analyzing the company. Not understanding the difference has burned a lot of investors in the past.

xiphias2 5y ago
Can you give recent examples of investors overestimating public tech companies with great tech? In the private market we had Theranos, which was completely opaque, but most of the big public failures were business innovations with unimpressive tech, like Groupon and WeWork.

nine_k 5y ago

You should not underappreciate the subject area expertise of people who analyze stocks in a particular business area. Many of them learn the subject area at a serious depth, exactly for the reasons you state: the balance sheet does not tell the whole story.

astrange 5y ago
Being a serious researcher is only good for stock picking if everyone else is going to come to the same conclusion, just more slowly. This is not true recently, what does meme stock performance have to do with serious peoples' opinion on Tesla? Actually, value investing hasn't worked for a lot longer than that, and it's probably because everyone else can see what you can for a public stock.
- nine_k 5y ago
  Knowing the meme environment is a part of the subject area knowledge :) I mean, understanding a bit about CPU architectures and chip production processes is needed to e.g. choose between INTC and AMD, and some knowledge about cell structures and mRNA is needed to decide whether to invest in MRNA. This knowledge is important, on top of understanding the balance sheet.