Howard Lindzon's key to investing
If you're going to take stock market investing tips from anyone in the tech world, Lindzon might be the guy. He's a Wall Street fanatic who runs a hedge fund and founded two companies in finance -- one that was a business news satire show, and the other that is a Twitter-like platform for dishing on the stock market.
Sarah Lacy and Lindzon delved into his tips on investing. "The key to investing in general is not to chase," Lindzon says. He explained that there's a few rules, the first being to be consistent and place bets wisely. That's just plain common sense.
But Lindzon's second rule was a little more surprising. "Don't fall for the headlines," Lindzon says. He then claimed he stays far away from the news, and doesn't follow it. That way, he avoids getting sucked into the hype cycle, which may or may not accurately reflect the value of a company.
"You realize you started a media company?" Lacy challenged him.
"Yeah but I don't watch news," Lindzon replied. "The news is a drug. It makes us feel good, it makes us feel bad. What people have to learn when they invest is the news really doesn't matter."
Lacy raised the point that emotional tweets about stocks carry just the same weight as emotional news headlines. Lindzon made a joke about not checking his phone -- but that doesn't change the fact that he tweeted today...and yesterday...and the day before that. Lindzon may not follow his own news-avoiding advice.
Despite the fact that Lindzon has built his career on the public market, he admitted that fellow industry leaders feel less inclined to gamble on such stocks. He pointed to Brad Feld, Marc Andreessen, Fred Wilson. "These are men and women who have made tons of money but they avoid the market," Lindzon says. "Eventually everybody will just get conned back into it."
He said that in this way -- the magnetism of the investment -- bull markets are similar to startup investing. "Humans are humans, and right now what's dangerous about the world -- and fun about the world and different about the world -- is everyone is connected." He pointed out that a tweet or a blog post can inspire a reaction in millions of people. That inevitably leads to more volatile markets. "To me, that's an edge because I understand it," Lindzon says.