When I first began investing in college with the money I earned from odd jobs in high school, I had no idea what I was doing. Online investing was a new concept back in 1997 and I couldn’t believe I could randomly press some buttons to buy and sell stocks. I was hooked and would purposefully arrange my college classes around market hours to get in some feverish trades.
What took exhaustive summers of working minimum wage jobs to save what little money I had quickly got wiped out making ill-advised trades. One time I bought a software company named Macromedia which I thought was a bank. Another time I bought a graphics chip maker named TDFX at the absolute top. The good thing about only having $3,000 to my name is that the most I could lose is $3,000.
It’s been 17 years since I first made my first trade online, and I’ve developed a much more thorough and systematic approach to investing. During this time, I’ve literally made and lost hundreds of thousands of dollars in the process. When you lose money, you start cursing the world and your stupidity. Just look at all the folks who bought into the Facebook IPO hype at $38, Apple at $700+, and any Chinese internet stock a couple years ago. Oops!
If only I had some type of platform where I could trade with virtual currency as realistically as possible for a couple more years. Maybe, just maybe I wouldn’t have made as many investment errors as I did since college. Maybe I would have been smart and shorted the home builders in 2007. Maybe I would have hedged out my company stock during the crisis to make sure I don’t receive a double whammy of a lower bonus and a lower share price. Who knows for sure. What I do know is that if you plan on investing your own money,do as much due diligence as possible. You won’t know your true risk tolerance until your positions start going the wrong way.
For those of you who are inexperienced investors, I’m pleased to introduce a startup called Olim Dives. Olim Dives means “future wealth and prosperity” in Old Latin and was started by Ben Hubbard and Roshan Vani. Olim Dives is a social investing site which allows users to trade a virtual $100,000 as close to real life as possible. You can also share ideas, compete for prizes, and learn from fellow users in the process as it’s a social investing site. Where was this stock market game when I was growing up?!
A CONVERSATION WITH OLIM DIVES’ FOUNDER, BEN HUBBARD
FS: Of all the places in the world, why are you currently based in Saudi Arabia?
OD: I have spent 8+ years in the large capital construction business executing some of the world’s largest and most complex projects around the globe. In 2007, the recession sparked a global shift in business strategy within our industry lead by a boom in the Mining & Metals markets. As commodity prices rose, mining companies sought to mine and refine various raw minerals wherever they could find them.
Unfortunately, most of these raw minerals are located in arid deserts in not so thrilling places in the world. As a result, I found myself working in various parts of the globe where raw minerals are abundant including Mongolia and Saudi Arabia where I am currently part of a team that is building the largest ever fully integrated Aluminum Refinery Complex.
FS: What’s your background?
OD: I am a 27 year old Mechanical Engineer from Dallas, TX. I am currently pursuing my MBA from the University of Massachusetts with expected completion in December, 2013. I have an avid passion for investing, something that I started doing when I was 16 years old.
I am a project controls analyst and have spent most of my career capturing data and performing extensive trend and risk analysis, while determining path-forward strategies to strengthen results. I specialize in cost control, analysis, and forecasting, spending a lot of time building forecast models from the captured data
I love to travel, which working in these locations has afforded me. I have been fortunate to visit over 35 countries in the last 3 years. After spending many years in the corporate world, similar to you, I have decided that I am no longer fit for what it offers. I seek to shift into the startup/entrepreneur world where I can let innovation and creative control drive the outcome rather than procedures and politics.
FS: Is Olim Dimes part-time or full-time?
OD: Olim Dives is currently a new startup with part time work requirements, but I am ready to move into a full time pursuance. As an investor and someone who analyzes risk for a living, it is important to know when to fully invest yourself into a concept while balancing the risk exposure. However, with being in Saudi Arabia and Mongolia for the past 4 years that risk is starting to look plenty appetizing.
FS: Why Olim Dives instead of an engineering startup?
OD: Being exposed to investing at an early age has always driven me to take a keen interest in the stock market. As an entrepreneur, you are always looking to fill a void in a market sector where you feel comfortable and recognize potential, which I believe Olim Dives has. This coupled with my background in data driven analysis and personal investment success has led me to want to make sure others start investing early in life, and protect themselves from what so many are suffering from now, a lack of retirement income. It is easy to tell someone where to start investing, what material to read, or what to invest in, but another thing to inspire someone to want to invest and educate themselves. That is what I seek to do.
FS: What is your target audience / clientele for Olim Dives?
OD: We’re largely seeking new traders and investors, or those who have no idea where to get started. For those seeking to get into the stock market, but have never found the courage to put their own money at risk, it is a perfect site. It not only allows members to learn from one another, but it adds an element of excitement through the various features such as the stock challenges and badge achievements that can potentially earn a member real cash. The site is perfect for anyone who loves to talk stocks, socialize, and keep up with the real time trades and opinion of others. Olim Dives is not your average message board.
FS: What is Olim Dives’ value proposition? Why should users sign up?
OD: First and foremost, Olim Dives makes virtual investing fun. Instead of just making virtual trades which eventually become monotonous, Olim Dives offers an array of features and contests that allows you to accumulate virtual cash in many ways. We believe that a little healthy competition between friends can add another layer of excitement to stock trading and keep people engaged and interested in the market, the ultimate goal.
Through challenging other members in stock games, earning badges, or gaining blog post votes, it is not just about the virtual trades like many other sites. The best part is that the virtual cash is not earned for nothing. It can be used to win real monthly cash prizes, as well as qualify for our annual investment bracket challenge tournament, Dive Madness, that offers over $15,000 in cash and prizes.
I believe that learning to trade stocks is much like learning how to perform your first job. You learn how to think analytically and manage your time effectively in college, but learn most of your required job skill sets from your colleagues and mentors. It is much easier to learn visually than to learn strictly through reading and studying.
Olim Dives takes that principal and applies it to the stock trading environment. You can read all the investment books you want and study all the definitions and metrics, but it is not the same as learning from others in real time, asking questions, performing the actions (trades) yourself and even more importantly, maintaining a level of enjoyment.
In addition, Olim Dives functionality affords privacy settings that allow members to choose what they share with others, where their information is posted, and what information is displayed from others both in and out of their network.
FS: What are the future possibilities for Olim Dives?
OD: Growth in members will allow the Olim Dives team to start finding data trends from the trades made across the site and possibly build algorithms for forecast and predictive modeling. We may also look for ways to turn the data into risk analysis measurement. On the platform side, we also wish to add “fantasy stock” leagues and possibly even launch a college campus tournament to see which University has the best team of traders.
We also seek to expand our integrated services by offering options trading, foreign markets, commodities and futures to bring as real as possible environment to our users. We will continue to add additional badges and stock games, and are even looking to create a “store” where users can use their virtual cash to purchase various “power-ups” such as a 10% increase on your next trade or $5,000 if you win your next challenge. Maybe we will change the name to Mario Brothers Investing.
FS: What are the biggest hurdles to invest and those who want to join your site?
OD: The biggest hurdle for a new investor is being comfortable exposing yourself through failure. Although we offer a lot of privacy capabilities, we seek to show people that failure is not only normal, but necessary and acceptable in stock trading. It is learning from these failures, as well as gaining the opinion of a trusted network before you commit to making them that is where Olim Dives benefits investors.
Investing is a notoriously private affair and we seek to open it up and make it more social so people can learn and get ideas from one another rather than from a professional who only looks to beat average market returns. We are passionate about people having control over their own investments and financial well being. A lot more people would be retired had they taken it upon themselves to fully understand their investments and gain control over them. Investing is not rocket science and can be a lot of fun, and Olim Dives seeks to provide the platform to do so.
GET YOUR FEET WET WITHOUT GETTING DRENCHED
I’m pretty sure that if I practiced for at least a year of virtual investing, I would have done a better job at growing my portfolios. Some of the mistakes I’ve made include: 1) Buying instead of selling, 2) selling instead of buying, 3) buying too much on margin and needing to exit a position due to margin calls, 4) doubling down when I should have set a loss limit, 5) buying too soon, selling too late. Practice makes better, and investing is no different.
Once you start trading, whatever position you hold becomes the most interesting thing in the world. For example, as soon as I got into Chinese internet stocks, I now read everything there is to know about all of them. I’ve got Google Alerts set up, I read every single news headline attached to each stock online and so forth. You instantly want to become an expert in your investments, which bodes well for future investments you make.
Equities should be a cornerstone part of your net worth. There’s plenty of risk as we’ve seen from the various corrections over the past 20 years. What I suggest every newbie investor do is try before you buy with Olim Dives or manually build your own portfolio and keep track of your performance. Only after you’ve made at least a handful of errors and understand the basic concepts of investing would I then recommend you then graduate to real money.
Remember, you will not know how strong your risk tolerance is until you invest real money. When you graduate from virtual currency make sure you do your due diligence, leg into positions, and maybe even burn a dollar bill to see how it feels to lose. The markets are crazy right now. Trade carefully!
Update 6/8/2014: Unfortunately, Olim Dives shut down.
INVESTMENT PLATFORM RECOMMENDATION
Invest In Ideas Not Stocks: Motif Investing is a terrific company based right here in the San Francisco Bay Area. They’ve raised over $60 million dollars from smart investors such as JP Morgan and Goldman Sachs because they are innovating the investment landscape with their “motifs.” A motif is a basket of 30 stocks you can invest in, which are aimed to profit from a specific idea or underlying theme. Let’s say you think new housing construction is going to quicken in the US next year. You could buy a housing motif which might contains Lennar, KBH, Home Depot, Bed, Bath, and Beyond, Zillow, and more in various weightings.
You can buy a basket of 30 stocks for only $9.95, instead of buying them individually for $7.95 through a typical broker. You can build your own motif, buy one of the motifs created by Motif Investing, or buy a motif by a fellow Motif Investor with a great track record. You can even buy retirement motifs, much like target date funds, except you don’t have to pay the 1% management fee. You get up to $150 free when you start trading with Motif Investing. Given my focus on buying winning long-term ideas and ignoring the short-term volatility, I really like Motif Investing’s value proposition for retail investors.
Mobilize Your Idle Cash Earning Nothing: Wealthfront is an excellent algorithmic advisory choice for those who want the lowest fees and can’t be bothered with actively managing their money themselves once they’ve gone through the discovery process. In the long run, it is very hard to outperform any index, therefore, the key is to pay the lowest fees possible while being invested in the market. Wealthfront charges $0 in fees for the first $10,000 and only 0.25% for any money over $10,000. Their minimum is only $500 to get started. Invest your idle money cheaply, instead of letting it lose purchasing power due to inflation.
About the Author: Sam began investing his own money ever since he opened a Charles Schwab brokerage account online in 1995. Sam loved investing so much that he decided to make a career out of investing by spending the next 13 years after college working at Goldman Sachs and Credit Suisse Group. During this time, Sam received his MBA from UC Berkeley with a focus on finance and real estate. He also became Series 7 and Series 63 registered. In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $150,000 a year in passive income. He spends time playing tennis, hanging out with family, consulting for leading fintech companies, and writing online to help others achieve financial freedom.
Updated for 2016 and beyond.