"If you choose not to decide, you still have made a choice." -Rush
Recently, I wanted to invest in 3D Printing. As soon as I heard about the concept, I knew the potential was limitless (for the next several years) and I would have jumped on investing into it at that time, except there were two major dissenting factors. First, I had quit my job and my risk tolerance was minimal. Secondly, the research I did on the subject unveiled three companies competing for supremacy in the industry.
Granted, the landscape was wide open enough for all three, but the memories of Beta and HD-DVD made the probability of it seem increasingly less likely. Even if I picked the correct industry for a boom (3D Printing), I could have picked the wrong company and my investment would have ended up as a bust. Individual stock selection is high risk by its very nature, and I have never been involved in it.
Once I got hired back at my prior income level, my interest in 3D Printing rejuvenated. Shortly thereafter I read a news article that the first 3D Printing Fund would be opened in February 2014. I thought it was my lucky day! By that point, I figured I would have restored my budgeting practices and I would be ready to invest again.
Unfortunately, the first article I read about the fund panned the investment because the fund manager had no experience in managing mutual funds, so I dismissed the investment idea altogether. Besides, the Dow was slipping and I figured the losses would continue for the next several months.
Instead, things turned 180°.
After a strong finish to March and a stronger April, I saw an intriguing link to an article in late May suggesting that the end of cable television was near. The presentation at hand would direct invested investors in where to put money to benefit for the new wave of television. It turned out to be a link by Motley Fool (no relation) and the 3D Printing industry was their answer, which I found out for a small investment of $50 for a 12-month subscription price.
Now that I had invested money in the idea of investing in individual stocks, I figured it was the best time to invest in individual stocks. Additionally, shares in $WWE (of whose programming, I have been a loyal viewer since 1988) crashed that month, so I thought for sure that I would invest in them and in one of the 3D Printing companies. Once again, I hit the dilemma: which one of the three? All three were recommended in the Motley Fool article.
That dilemma made me reconsider the 3D Printing Fund. I figured if I were going to invest in an industry of which I knew nothing about, then my investment selections would likely pale in comparison to the selections of a professional. The fund manager Alan Meckler was basically a journalist by trade, and his lack of experience as a fund manager was neutralized by the fact that my option was investing myself, and I did not have any experience either. Therefore, I decided to invest in the 3D Printing Fund ($TDPNX). Incidentally I canceled my subscription to Motley Fool in the initial grace period, and I got a full refund.
I talked to someone at work whose interest in discussing investments is equal to mine, and he asked why I would invest in a mutual fund for just three of its holdings when I could just invest in the three stocks myself without getting charged fees. My answer was that I wanted to access to Mr. Meckler's knowledge about the rest of the industry, and my friend (an attorney by trade) immediately ceased questioning. I think he was testing my confidence in the decision, and I greatly appreciate it if so. I did further research after investing, and I learned that the fund was registered as a global fund, so foreign companies creating advancements in the field would be on the fund's radar (if not in its portfolio holdings) long before residents in the United States would even heard the company's name.
Since I started my investment in the fund, it has increased 11%. Although completely satisfied with the returns, I started looking at the individual returns of its top 10 holdings today. The three stocks that I was torn among had returned 2%, 7%, and 15%. Three of the other stocks in the top 10 that I never would have known about on my own had returned 20%, 25%, and 40%.
While the market is setting new all time highs, only 50 points away from crossing 17,000, I think most stocks are a bad purchase at this point (I expect the market to go through a correction soon, and an increasingly more severe correction the longer it stays afloat). However, I want to diversify myself while the stock market is high to mitigate the impact and, ideally, find at least one industry that sustains its value while everything else around it crashes.
Maybe if the market fell below 15,000 again, I would reconsider buying individual stocks. For now, mutual funds offer all the investing prowess I need.
