Last quarter I took my second finance course, where I learnt all about portfolio management; which is a two step decision. What stocks to select and how to distribute your money within these stocks.
At the beginning of the class I was extremely excited that I will learn what the people at Wall Street do. Alas! it all turned out to be a bummer - key is to simply invest in market index funds and go to sleep. That's it !! And as my professor put it: if you want to do better than the market, you have to be a LOT LOT LOT more smarter than an average investor, and on top of that spend practically every moment looking for arbitrage opportunities.
On one hand its a relief - that oh I don't have to spend every minute of my time finding the right stocks, all i have to do is invest in S&P 500 or something similar. But on the other hand I realized how much time, effort and RISK is involved in picking stocks to make that little extra money. Apparently, these giant companies make money on volumes, and an individual like me cannot do that, because to trade in such huge volumes I will need to own Swiss Bank !!
So, the mystery of individual investing is solved - market index funds.
But what about my major. I had dreams of walking on the wall street. (Yes, even after the market went kaboom !) I had heard that people put in very long hours and its a high stress job but I had never really realized the intensity. I am a very money minded person, so I don't take losses very well. Therefore, I definitely do not want to be the person bringing sorrow to investors. One always hears these success stories of folks who made thousands of dollars, but what about the stories where people lost even more. No wonder these people are paid rather well. But what about the quality of life? Specially, if you are married and are used to having a life :).
So I am back to good old CIS (Computer Information Systems). This doesn't mean that I won't have a challenging career - if I go up the ranks, I will definitely be stressed out once in a while. But the key is "once in a while".
At the beginning of the class I was extremely excited that I will learn what the people at Wall Street do. Alas! it all turned out to be a bummer - key is to simply invest in market index funds and go to sleep. That's it !! And as my professor put it: if you want to do better than the market, you have to be a LOT LOT LOT more smarter than an average investor, and on top of that spend practically every moment looking for arbitrage opportunities.
On one hand its a relief - that oh I don't have to spend every minute of my time finding the right stocks, all i have to do is invest in S&P 500 or something similar. But on the other hand I realized how much time, effort and RISK is involved in picking stocks to make that little extra money. Apparently, these giant companies make money on volumes, and an individual like me cannot do that, because to trade in such huge volumes I will need to own Swiss Bank !!
So, the mystery of individual investing is solved - market index funds.
But what about my major. I had dreams of walking on the wall street. (Yes, even after the market went kaboom !) I had heard that people put in very long hours and its a high stress job but I had never really realized the intensity. I am a very money minded person, so I don't take losses very well. Therefore, I definitely do not want to be the person bringing sorrow to investors. One always hears these success stories of folks who made thousands of dollars, but what about the stories where people lost even more. No wonder these people are paid rather well. But what about the quality of life? Specially, if you are married and are used to having a life :).
So I am back to good old CIS (Computer Information Systems). This doesn't mean that I won't have a challenging career - if I go up the ranks, I will definitely be stressed out once in a while. But the key is "once in a while".
