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Should non-professionals research their own investments?

Patri Friedman left this very smart comment on the convincing arguments post -

I’m pretty skeptical of whether researching investments is a good idea for non-professionals. Financial speculation is fun, but you are competing against specialists who have spent their whole lives studying the subject, have teams of researchers, and are betting so much that they can afford to buy the best computers, data, etc. I think almost everyone should just buy the Vanguard Target Retirement 20X0 fund.

The exception is if you’re in the startup world & you know people who you trust & respect who are doing startups, angel investing in them w/ 10%-20% of your income makes sense to me. At worst you’ll lose a little money & learn a lot about who to trust & how startups work. Another is if you know a city/region/country very well and want to own property there – ownership has advantages (ie we have done extensive customization of our cohousing community here in Mountain View) and since it’s such a big asset it’s definitely worth researching.

This is a great point.

I've been studying a lot of finance lately. One that I've really enjoyed is "The Intelligent Investor" by Ben Graham.

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During my second year at college, I thought that investing was easy. I read about options, paper traded for a few months, and then solicited my friends for investments. Many of them invested in my hedge fund - "The H Fund", which I started with a friend. In total we had $26k, which was quite a lot considering how young we were.

The fund survived for a few months, even being profitable for a short amount of time. In the end, though, we lost all of the money. Luckily I have awesome friends who understood the risk, and no one was mad. Still - I learned my lessons and stayed out of the stock market for years.

For some reason or another I started reading about Warren Buffet. For those that don't know, he is the second richest man in the US, with a worth of over 40 billion. What makes him exceptional is that he is the only person on the top 100 richest people list who made his money through investing.

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