Investing in Open Source? 77
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?"
Fiduciary obligations (Score:5, Insightful)
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.
Re:Fiduciary obligations (Score:4, Interesting)
Maybe he's setting up a social responsibility fund. Maybe he's setting up a fund around companies that will have positive impacts in the Third World. Maybe he's given a chunk of change for speculative investing in up and coming technologies.
We don't know.
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It doesn't matter. It's still morally wrong to invest other people's money in thing that you know are not good investments. Actually, it's criminal too, I'd have to guess. If real fund managers did this, they'd be fired, sued, arrested, and ripped apart by mobs in the streets (as they should).
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Who's advocating that? Open Source contributing companies can make money [marketwatch.com].
Actually, it's criminal too, I'd have to guess. If real fund managers did this, they'd be fired, sued, arrested, and ripped apart by mobs in the streets (as they should).
So there are no speculative funds or ones that have down periods? You seem to be saying Open Source companies do, always have, and always will l
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Re:Fiduciary obligations (Score:2)
Every professional investor has biases he brings to the table. These largely determine how you pick a financial services advisor.
Regardless, the advisor is responsible to meet whatever objectives I set for my portfolio. To do anything different is at the very minimum unethical.
There are probably
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That would probably be nice but he probably wouldn't, any more than most hedge funds keep their methodology secret. Just try to get a hold of Renaissance Technologies's algorithms...
If he had data to support the superior value of M equities or a good reason to believe M equities we
Re:Fiduciary obligations (Score:4, Insightful)
I've no idea why you feel that open source and profits are intrinsically misaligned.
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Well, in his question he implies that his desire to promote open source is influencing his decision. That should not happen. The only thing you should think of as an investor (especially with other peoples' money) is how to make the greatest profit. If you happen to think companies depending on open source software are undervalued, then that's great. However, if the people have given him money expecting him to turn a profit (even on a student investment firm) then he is in fact acting immoral by even co
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Well, in his question he implies that his desire to promote open source is influencing his decision. That should not happen. The only thing you should think of as an investor (especially with other peoples' money) is how to make the greatest profit
No, there are other things you should think about, such as risk level and safety factors.
You can make a big profit once, but still be in trouble, if you took on too much risk to make that profit, you could lose it all and then some the next day.
The auth
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I think that a lot of problems with the way the corporate world operates these days is down to exactly that attitude.
Granted, it's not a wise idea to invest in a company that is probably going to lose money. That does not mean, I don't believe, that we should always go after the highest yield investments.
People bitch and moan about how companies are always looking to do anything to make a short term profit increase, and the reason is because that's what stockholders want. If stockholders value
Bullshit indeed (Score:2)
Bullshit indeed. Two wrongs don't make a right, and you can't be the "good guy" by using immoral means. Whatever problems you have with corporate morals or behaviour, turning into an immoral asshole yourself and blowing other people's money to reward people you like (whether it's your girlfriend or your favourite OSS developper) is _not_ a moral high ground.
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Your personal responsibility as someone working with other people's money is to go after the highest yield investments. That is the only thing you should be considering (as someone else pointed out it should be within whatever risk factors that you can tolerate).
You are correct (Score:2)
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As to the MS threat, well, they have been after Redhat for over a decade. And considering that MS could not do it BEFORE their conviction and sentencing, they are not likely to do it now. As it is, MS is focused on Google, not Redhat.
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Btw, saw that you are at GE-Med. I taught there in Waukesha, WI back in 2000. IIRC, it was for a java class. In addition, grew up in Wonder Lake, IL. Great area. I miss the winters there.
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You are spot-on, but this doesn't answer the question he asked. Assuming (hypothetically) you were ordered to invest in Open Source, what company would you invest in? Novell?!?! (SARCASM THERE!)
It's not hard to understand a mutual fund's interest in Open Source. The PH
First mistake is... (Score:4, Informative)
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hmmm....no! (Score:1, Informative)
Skip it (Score:5, Interesting)
Try energy. Oil is a good one. It is almost certain that W's tax cuts will be removed (and soon), but the simple answer is that China and India are are on a tear. They will be increasing demand on ALL oil resources. I would look heavily at any oil company. In addition, consider nukes AND alternatives. High Oil prices combined with Global warming will force us down this path. Wind energy companies are good ones. GE and westinghouse power are interesting.
Finally, consider looking more around the globe. America is heading towards a major slow down. W has ran up a major deficit like Reagan did. In addition, he is spending all sorts of money on funding the war, tearing apart EPA, buying the most expensive drugs for seniors, etc, and even cutting alternative energy research WHILE giving tax cuts to oil. Combine with moving core manufactuering to China, and you will soon see a collapse in our money policies. It is only a matter of time before the dollars starts to sink and we will be forced to raise interest rates AND taxes to keep foreign money flowing into America. This would normally induce a major global depression (think 1930s), but enough business is globalized as to allow the other markets to move forward without us.
Invest in something proven (Score:4, Informative)
Use the software (Score:2)
Investment goals (Score:5, Insightful)
IBM/RedHat (Score:5, Informative)
Both of these companies invest heavily in open source, and are pushing Linux. I'd have recommended Novell as well, but I don't know what effect the Novell-Microsoft deal will have in the long term.
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If the point of the club is to learn about investing, then they need to learn that one of the basics is to diversify your portfolio. You can't do that by buying only two stocks.
In general, it also makes sense to weight your investments according to the market capitalization of the companies. According to the Capital Asset Pricing Model [wikipedia.org], this is what all rational investors do. Although the CAPM is only a model, and like any model it's only an approximation to reality, it captures something essential, which
The new guy on the block (Score:4, Funny)
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**Note - the above does not constitute investment advice. Consider your own personal tolerance to risk before choosing any investment. Etc etc other disclaimers.
Start an open source business!! (Score:2, Interesting)
Here's the plan:
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Follow the institutional ownership (Score:4, Interesting)
Here are a few suggestions (Score:2)
Google
Novell (hmmm?)
They are all solid, and all "good to open source", in some way.
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Google is not an open-source company.
Novell, aside from their current deal with MS, should be looked at with suspicion because it's trading at about $6. A lot of people recommend that individual investors stay away from stocks that trade below about $3-5 a share, and Novell is pushing that limit. When you get down close to the penny stock range, you can run into problems with liquidity. Stocks with very small market capitalization are also vulnerable to insider trading, pump-and-dump scams, and every other
So Sayith Futurama (Score:1)
That about sums it up. If you must invest in open source, look at the companies which offer tech-support: that's where lot most of the profits are.
stock markets are for screwing 'the masses' (Score:3, Interesting)
Recently found a copy of the 1974 book, The Screwing of the Average Man. One of the early chapters is about how average folk got screwed in the late-60's stock market - funny accounting, etc. As I read it tonight, some 32 years after it was first released, I amazed at how "history repeats itself." The exact same things happened in the late-90's tech bubble.
The U.S. stock markets may be at or near record highs, but adjusted for teh inflation they'd still have to advance another 25% or so to match their bubble peaks. Where are the fundamentals that would justify another 25%? Corporate profits may be at record highs, but average folk are getting squeezed. The housing bubble has burst, foreclosures are going up. Ford recently got 35,000 employees to take a buyout aka paycut. What is the growing industry that will offer jobs that offer comparable pay?
Most Americans live in a media-induced Never-Never Land [wikipedia.org], where the American economy, stockmarket and military machines are invincible because they always have been. Never mind that this is demonstrably false (great depresion, 1970's inflationary recession, Vietnam, Iraq, etc) - we're conditioned via compulsory government schooling and the idiot-box (television) to have a short memory.
More on the Screwing of average folk [kuro5hin.org]...
I gave people $1 (1 ounce) silver coins last Christmas. Think I traded around 10 or 11 "Feral Reserve Notes" for each one. Silver [kitco.com] is now up to $13.75 or so, so I'm looking at having to put out about 50% more funny-money paper if I want to do the same thing this year (coin dealers typically charge spot + $2, iirc). Inflation at work.
If I had another $10k, I'd split it between metals and Euros... As it is, I'm sitting on a couple hundred ounces of silver and a couple ounces of gold. Not a sure thing, but the economy we know is doomed. The stock market is terminal too, but the big money will be sure to get out first, in keeping with the traditional screwing of the masses (that's 'us' - me, you, and everyone who reads this comment who doesn't pull in $1million/year).
Actually, I'd buy more Earthboxes [earthbox.com], potting mix, and fertilizer (already have plenty of seed). $10k could get me two pallets worth (200), and all the potting mix and f
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One problem is that if enough of the masses believe this, it becomes reality. Heh, from "Sneakers:"
Cosmo: While in prison, I learned everything in this world, including money operates not on reality...
Bishop: - But the perception of reality.
Cosmo: Posit: People think a bank mig
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Re:stock markets are for screwing 'the masses' (Score:4, Insightful)
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.
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And that is exactly the point. I don't watch much T.V., but someone had the history channel on last night, and the show was on 'pizza'. Mr. Lombardi, an itallian immigrant, had opened the first pizza shop in New York City in 1905. In 2005 the shop celebrated a century of being in business by selling pies for the original price: $0.05.
Land's other drawback is that it's currently overpriced, as a
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A relative thinks it's a bad investment because it "only" returns 5%/year.
5% is crappy, it is barely beating inflation. I mean, its not bad for an investment you don't have to do anything for (I'm assuming you aren't farming the land yourself, subletting it, correct?) but my 401k / Roth IRA's are both around 12% and we aren't even at the end of the year yet.
The collapse of the economy as we knew it is well underway, with housing leading the charge.
The price of land
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That's just inflation. What's the equivalent price today ? $5 ? If so, that means the dollar has had an average of 4.7% inflation over the last century.
So, any "investment" would have to do better than that, or it'd have been a loss. Gold, for example, has *not* done better than that, the value of gold ha
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If civilization falls tomorrow, I'd rather have a huge supply of gasoline, food, water purifiers, and other necessities. Gold, silver, diamonds, and jewels might be pretty to look at but aren't of much practical use.
Market investing doesn't help the company (Score:5, Insightful)
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
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Hell... a majority of the American public doesn't even understand how toxic carrying credit card balances is to their financial health - and that's something really easy to understand.
At the next level, so few Americans invest in their retirement plans - they even give up company matches by not putting in a contribution.
When people cannot even see how
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Not exactly what you want but.... (Score:4, Interesting)
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why mutual funds? (Score:3, Interesting)
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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 differ
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You buy 100 barrels of oil today, and then at some point in the future you can *sell* 100 barrels of oil. Actually, you can sell sligthly less than 100 barrels of oil, because *storage* of oil is not free.
You could *transport* the oil, which would be productive (if demand was higher on the destination than on the departure), but then you are in the shipping-business and not in the commodity-market.
Over time, nearly all commodities have
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There's been quite a few of those, and odds are those will continue to occur in the future.
But here's the thing, it's *still* mostly a question of 3 steps forward, 1 backward kind of thing.
USA is more wealthy today than it was 100 years ago *despite* the US economy having tanked several times in those years. There was the severe depression in the 30ies, there where world-war-2, there where the dot-com-bust. And there's some indication you guys
MySQL (Score:2)
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MySQL is venture funded, so you can't put any money in until they go public (which could be quite a way off)
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That's not to detract from your assertion that just because a particular business operates for-profit does not necessarily make it a good investment. Businesses that operate(d) in this way include Enron, Boo.com, SCO, etc.
Microsoft (Score:2)
Consider also the Monkey Boy video [youtube.com] - I'm being deadly serious when I say I saw that, then immediately switched to Mac.
If Microsoft didn't suck, there would be no alternatives.
Work backwards... (Score:2)
Dumb joke of the day (Score:2)
Dude, priorities! (Score:2)
If it was your own money, I'd say go ahead and invest wherever you want. But since you're just "in charge" of someone else's money, you have an obligation to invest it wherever you'll get the best return.
It was a nice thought, but in this case you really should try to make money instead of social policy.
Novell (Score:1)
I hear Novell does linux and I hear there stock is going to soar due to some deal they made with Microsoft. That's gotta be a win-win combination!
Here endeth the sarcasm.
(/me ducks from the flying penguin thrown at me)
General guidance (Score:3, Interesting)
Theoretically, the value of a business should be the net present value of its future income, discounted by risk. Consulting and services are perceived as more risky than revenues from intellectual property, therefore an open source company is likely to be valued less than a proprietary software company of equal profitability. In fact, a money losing intellectual property (IP) based business may have greater attraction to investors than a moderately profitable service business.
Personally, I think the risk differential is exaggerated, but in fairness the IP of a proprietary software company is an asset that could, in the worst case, be liquidated. Also, labor is expensive and it is difficult to grow labor intensive businesses quickly. A well run consultancy usually can be characterized by conservative growth goals and high efficiency. This places constraints on achieving high ROI. However, within those constraints you may find a solid, undervalued investment.
Of course the fun of investing is finding exceptions to the rule. I think most people who like to do their own investing think of themselves as contrarians. The flip side of the bias towards proprietary business is that service businesses may offer the chance to buy a share of future income that is relatively undervalued. However, this requires more homework, because you're placing relatively more faith in the management and sales team.
There is one kind of intellectual property that an open source company can avail itself of: trademark. Red Hat was for many years practically synonymous with Linux in the minds of many managers. It is still a name that commands immediate attention. If you are looking to make a killing, as opposed to merely outperforming the market by a bit over a long period of time, I think this means that you are looking for an outfit that has a plan that will create a brand that will command respect.
Brand is an instance of a broader class of assets: things which give you an unique competitive advantage with customers. Perhaps you are looking not for a software company, but some kind of consumer facing retail or service outfit that is an open source contributor. Maybe you are looking for a company that has uses open source in an unique hardware device. If you had enough money to place VC (which you don't), you could look for companies with innovative plans to entrench themselves in a vertical market -- a difficult but underexploited path for F/OSS.
You have to decide what kind of investor you want to be. All investors who hope to beat the market are contrarians, but you can be contrary in different ways. Some investors are like the tortoise in the fable: they beat the market by focusing further down the path to the finish line than most. Me, for example. I like money, but I have other things I'd rather be occupying my attention with, so I check in on my investments maybe twice a year tops. While the open source movement as a whole is something that will continue to grow and prosper, I don't think a single company that is highly dependent on F/OSS is an appropriate investment for the tortoise except as a part of a diverse portfolio.
Other investors are hares looking to beat the market by finding something before others have noticed it. Maybe that's you. The important thing is to be very critical of your argument for investing in something on that basis. Creative people can envision virtually anything working, and are very good at selling blue sky scenarios to others like themselves, and ready to buy the scenario when it piques their imagination. Mark Twain was no sucker, but he lost his fortune investing in high tech printing equipment.
Remember you are not investing in "open source" or "technology", you are backing a specific business plan. Is the data in that plan verifiable and correct? What way
Where? (Score:2)
Someone has to say it... (Score:1)
2. ????
3. Profit!