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Investing in Open Source?
echrist1 asks: "I'm in my school's investment club, and I'm in charge of investing $10,000 (real money) into technology equities. Clearly I want to make a profit, but I also want to do something to help the Open Source movement. Does anyone know of mutual funds that invest specifically in companies that further Open Source?"
I'm assuming two things that are implied but not clearly stated in your question: 1) The money that you are investing - or at least some of it - is not yours, and 2) You like open source, but the owners of the money have not specifically requested an open source preference. If either of these are false, please ignore my post.
Assuming those two to be true, you should not even be considering the issue. If you are playing with someone else's money - even as a learning exercise - you have an obligation to act in their best interests. Otherwise, you're just doing a Halliburton on a smaller scale. Save your good intentions for your own money.
BTW, Sorry to criticize. I like the idea of supporting open source. It's just not the legally or morally proper thing to do here.
Maybe you've decided that open source will be the most profitable type of investment, but I think you chose open source for more ideological reasons. If your goal is simply to make as much money as possible, then pick your investments according to that goal.
You seem to be under the impression that if you buy $1,000 worth of Red Hat stock (for instance) that the money somehow goes to Red Hat. This is not correct.
The issuing company got their money at the IPO. When you buy that $1000 worth of stock, your $1000 goes to the previous stockholder, and *none* of it - not a dime - goes to the issuing company.
The only benefit the issuing company has - and it's an indirect benefit - is that if you buy that $1000 worth of stock you create a slight upward pressure on the stock price, which, in turn, will increase the "market capitalization" value of the company.
Frankly, if you want to help Open Source financially, your best bet is to take a percentage of the profits and donate it to your favorite non-profit Open Source entity.
-Maple Syrup
Because of various fees, you cannot sensibly invest much less than say $1000-$2000 in a single stock. If you want to invest abroad, especially outside of west-europe/north-america the fees tend to be higher, I looked into it, and for me, for example, I found no cost-effective way of investing less than about $5000 in a single south-american stock.
This poses a problem if you want good geographic spread, and don't have a fortune to invest. 5-10 stocks in different sectors tend to be enough to have a high chance of following the index, more or less.
Buying 5-10 different stocks from Norway is trivial. It's easy, and the fees are low. Total cost $10K - $15K (on the norwegian stock-exchange stock is sold in "lots" that each cost $1k-$2k, smaller investments are possible, but it costs extra and is not cost-effective)
So far fine. But then let's say I'd want to diversify into western europe. I could get another 5-10 stocks from say Germany, UK and Russia. Here trouble starts. Russia is not easily accessible in a cost-effective way for small sums. Germany and UK is, but the fixed-fees are higher than for Norway. I'm figuring, I'd need $50K or more to reasonably cover Europe, even then it'd have to be "pick 2-3 stock-exchanges, ignore the rest"
So, I use mutual funds for covering those areas and exchanges where I'm not heavily enough invested that *can* spread alone.
For me, this means Norway:stock. Nordic-countries:stock. Germany,UK:Stock. USA:Stock. All other parts of the world:funds. I go for index-funds with low provisions, I'm not *interested* in paying for the crack-consumption of some "I can beat the market" whiz-broker that, in the end, on the average, doesn't end up beating the market. Good spread. Low fees. Those are my *only* 2 criteria.
I generally buy-and-hold. I'd only drop a stock either if I needed the money (did drop some when buying a house this summer) OR when the company does something terminally stupid that I either can judge better than the market, or that makes it impossible ethically for me to hold the company. I shorted SCO at $18, for example, which is speculaction, which I normally don't do. However, in this particular case I was 100% convinced that they where full of crap and suing IBM would lead to bankruptcy. I cached in when they passed $5 on the way down, today they're at $2 (but the short would've expired anyway)
My time-horizon is long. It's unlikely I'm gonna need the cash before the kids need to get established and/or I don't feel like working anymore. This means 20-30 year horizon. I don't *care* what the stock did this week. I care how it's gonna do this *decade*.
The reason is simple: Money represent opportunity. Opportunity to do something you couldn't do without. Stuff you do is, on average, productive. (if it wasn't humanity would be better off doing nothing, which is obvioulsy not the case).
Earthboxes produce something. Food. Pretty flowers. Spices. Whatever you want. They *contribute* to the wealth of humanity.
Precious metals sitting in a box or in a safe, however, don't produce anything. A single ounce of gold placed in a safe today will still be a single ounce of gold a decade or a century from now.
A earthbox (or any other productive thing) will in a decade produce stuff worth many times its initial cost.
Precious metals are only a positive investment if you believe humanity in sum will be poorer by the time you need the money than we are now. Not a good bet, honestly.
If you're convinced that we'll see global meltdown, go for it. But honestly, the odds are against the doomsday-scenarios by a very large margin.
Even the biggest crashes and disasters we've experienced (such as the 3oies depression or WW-2) didn't change the general trend. Humanity was better off in 1940 than in 1929 -- despite the depression. And better of in 1960 than in 1940 - despite WW2.
So, if you're convinced the next crash is near (I'm not, but I agree it'll happen), buy stuff of lasting value -- but stuff that is *useful* in the meantime, not stuff that is simply stored in a safe.
Storing gold in a safe is essentially a bet that doing *nothing* productive will give a better return than doing ones best to do something that *is* productive. And that is not a good bet.
Furthermore the amount of gold *grows* over time, more is found and dug out all the time, only small amounts of gold are lost or consumed. Land is a much better option; they don't make any more of that, and it can be *used* without the value sinking. You can *rent* out land, not many are all that interested in *renting* cold. (why would they want to?)
Land has *one* drawback: if you believe in total collapse of government, then the "ownership" of land can be completely worthless, you can't take your land with you if you have to flee the country, for example. (would be tricky with gold too, but atleast you could try) Hiding land is also not really doable.