How to buy the future at a discount

Investing in emerging tech is the greatest opportunity to buy the future at a discount.

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Since I’ve met a lot of new people on Twitter recently, I figured I share a few of my considerations for investing in emerging tech.

It goes without saying, but this is not investing advice 🙂

What to think about when long-term investing in exponential technologies

Here are a few things that I look for when deciding to buy a cryptocurrency or “growth stocks”.

Because I’m not an accredited investor (yet), I’ve never purchased equity in a private company as of yet. There are, however, ways to do this, but we will save that for another post.

This type of investing means that we are betting on what will happen in the future.

None of us has a crystal ball, yet for those of us that love thinking and forming hypothesis about the future, these are a few principles I try to keep in mind.

This is a running list and will be changed / updated.

Embrace a long-term mindset

  1. Focus on long-term fundamentals. Yes this is vague, but the rest of this list essentially focuses on those “fundamentals”.
  2. What do we mean by “long term”? — invest with a 10-year time horizon (at a minimum).
  3. There are many short-term investors out there. Unfortunately, I don’t have insight into the day to day or even quarter over quarter changes in market conditions. Because of this, trading and short term investing is not and never will be a strategy that I follow.
  4. With emerging technologies, quarter over quarter performance is not important. The company’s potential to impact the future is what matters.

Tools and tractors come before skyscrapers

  1. Before applications of a new technology can thrive, the infrastructure and platforms must be in place. All good buildings start with a great foundation.
  2. Invest in the platforms and infrastructure. In computer technology of the 90’s, this looks like data centers, servers, and hardware. In bitcoin and blockchain, this looks like Ethereum, Tezos, or perhaps anything that enables the creation of decentralized applications (dapps).

Curate your own information

Some people call this “do your own research” aka DYOR. The point is, no one can tell you where to invest. You have to figure that out for yourself. Before we dive into this section, I’d like to share a quote I’ve saved:

“Nobody knows the way. Try to figure it out. Forget school and experts. Figure it out yourself.”

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  1. Follow ideas from the smartest people in the world. This means following the developers, engineers, and the people that are actually building emerging technologies.
  2. Search for information from these people that is not mainstream. Dig into developer forums, comment sections, infrequently viewed threads, niche podcasts, etc. Ask this question: Where are the users? Where is the innovation?
  3. You can find developer communities on Reddit, Discord, Twitter, and more.
  4. Find the influential minds without a lot of followers.
  5. In addition, follow the big, influential people in our society that are known to be contrarian thinkers. For example, here are a few of the people I follow. (meaning, read their blogs, podcast appearances, interviews, etc.)
    • Elon Musk, Michael Burry, Cathie Wood, Peter Thiel, Vitalik Buterin, Warren Buffet, Charlie Munger, Ray Dalio, Tim Ferriss, Mark Zuckerberg, Kevin Rose.
    • Yes, you are becoming a bit of a tech-culture anthropologist.
  6. Focus on a profitable industry.
  7. Invest in founders-led companies that also have a long-term vision, and plan on running the company for the coming decades.
    • If the founder of the company is still the CEO, that is a good sign.
  8. Form qualitative hypotheses based on every data point that you can find.
    • I say qualitative because its impossible to know how big when dealing with exponential potential.
    • Investing in the future is more qualitative than quantitative. Both types of data have their place. I haven’t found a good way to use quantitative data to form quantitative predictions yet. Quantitative data serves the role of predicting where things are headed. You can more accurately predict directional movements, buts it is almost impossible to know when and how far.

Uncategorized thoughts:

  1. Traditional investors tend to look to the past to determine chances of future success. When investing in emerging tech companies that have 1000X potential, ignore this strategy. Focus on whether or not the team will be able to deliver on their mission, and whether or not their hypothesis is correct.
  2. Ignore news related to regulation, laws, data privacy, etc. Although a relevant cause for concern, these problems are all very much solvable and do not hinder the company’s ability to grow and remain profitable.
  3. Dollar cost averaging is overrated. On truly exceptional investments we’re looking for, the earlier, the better.
    • The value of encouraging people to “dollar cost average” is if they only have so much to invest at any given time, like in the case of getting paid a salary every two weeks and investing 10% of it in your retirement accounts.
  4. Swing seldom, swing heavy.
  5. Although making a big swing early on is the goal, don’t be afraid to buy the dip. On those truly great investments… buying on the upward trend can never hurt.
    • Yes, this is slightly against what I said about dollar cost averaging.
    • Examples: Ethereum between 2016 – 2021, or Tesla between 2018-2021
  6. Listen to everyone’s opinion, but be careful which ideas you subscribe to.
  7. Is the company investing in growing the business, or are hoarding cash? For public companies, look on the 10-k annual report, compare net change in cash over time.
  8. When investing in exponential technologies, one of the biggest mistakes you can make is selling too early. Reasons to sell include – fundamentals changing or re-allocation to better opportunities. Additionally, if you end up deciding to sell an investment, consider keeping 10% of the holdings as a “just in case is 1000X’s” bet.

Vanilla and general wisdom:

  1. Don’t ever lose money. Always follow rule number 1.
  2. Only invest what you can afford to lose.
  3. Be willing to watch your investment go to zero.
  4. Never sell.
  5. Only invest in things that you understand.
  6. Understand the utility of tax-favorable retirement accounts, and use them to your advantage. That’s why they were invented – for you to benefit from as a citizen. HSA, Roth IRA, 401K, etc.
  7. A person only needs 1 or 2 big wins in their lifetime to be set for life.
  8. Don’t be afraid to wait. The money isn’t made in the buying
  9. Borrow ideas from everyone that is smarter than you. Some investing advice contradicts itself. Become comfortable with the mental eustress of cognitive dissonance.

If done well, This will, if done well, help you identify tech trends before everyone else

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