Are you both an engineer and investor?

[JAllen]

 

PLEASE RESPOND TO POLL WHETHER OR NOT YOU ARE AN ENGINEER!

 

Feel free to comment how we could reduce engineer-selection-bias. 

 

I realize this is far from a scientific poll, but we will at least have a floor of engineers as a percentage of total forum members (wondering about this number) and potentially a more meaningful percentage of members who are both investors and engineers.

 

 

I've been fascinated by the overlap of these two domains for a while after seeing so many people that are also engineers in previous threads.  I myself have become an engineer over the past few years, after becoming a professional investor and want to appease my curiosity about this subject, thus this question.

 

 

Would be great to learn more about your overlap: are you primarily one or the other? Which do you do for work?  Which did you start earlier in life?

[Hielko]

I have a master degree in software engineering, but I have zero professional work experience :). Been playing poker and investing the profits since I finished my education. But think investing and engineering are a good match because both require similar skills like analytical capabilities, affinity with numbers etc

 

 

[leftcoast]

I started my career as a mechanical/aerospace engineer, then after a few years in the workforce, went back to school for the much-maligned MBA. Roughly a third of my b-school classmates were engineers like me making a career change into management, consulting, or finance (and much less commonly into marketing or HR). I think engineering-->business is a very common career path. Going the other way -- from finance into engineering -- is much less common. In fact, you're the first person I've heard of to do that!

 

Not surprised at all that so many people here are engineers, or that so many engineers gravitate toward value investing, whether personally or professionaly. The highly quantitative, analytical, and probabilistic approach to problem-solving that is drilled into engineers is particularly applicable to this field of business. In engineering, you are right or wrong based on how accurate your insights, models, and calculations  are... not because of who agrees with you or how persuasively you can argue or bullshit. Same goes for value investing. There's something very appealing about that to many engineers.

 

Many of the "mental models" that value investors use come from the field of engineering, the most obvious of which is the concept of "margin of safety." I was calculating margins of safety a full decade before I discovered value investing. But it wasn't on stock valuations, it was on things that would kill people if the numbers were wrong. Mechanical and civil engineers in particular have a very healthy respect for the concept of margin of safety.

[merkhet]

I suspect that the engineering link is because the margin of safety concept is key in both disciplines.

[LC]

I think it has to do with "intrinsic value"

 

To use a famous example...a bridge, from an engineering standpoint, has an intrinsic value. And it can be quantified. Spans X meters, can  bear up to Y weight, etc. etc.

 

From an investing standpoint, the same bridge costs X dollars to build, but can generate Y dollars in revenue.

 

Same type of analysis just focused on different factors/variables.

[gary17]

Interesting a lot of the engineers are software or electrical.... must be the discipline of engineering with a lot of excess capital to invest :)

[JAllen]

I suspect that the engineering link is because the margin of safety concept is key in both disciplines.

 

 

I think along this same line is that both engineers and investors are 'optimizers', or at least that's how I've often thought about it. 

 

 

Investors optimize for cheapness and quality over tens of thousands of available stocks across the world.  This is obviously quite a difficult optimization problem, but also a fun one. 

 

 

Engineers constantly strive for other things: performance, strength, scalability, cost, etc.

 

 

And yes, we often reduce our optimizations to numbers which gives us comfort.

 

 

With value investing, I've always loved it because it truly is a method that delivers superior results, over time.  Many people are constantly searching for investments that are too good to be true, and value investing is, to me, knowing that sometimes investments are too good to be true and patiently waiting for them.

 

 

Engineering is similar in that we know that if we do certain things like design for robustness prior to construction or development and test thoroughly, we will likely build a superior or stronger product than others that optimize less.

[SharperDingaan]

Started life as a petroleum engineer, opening up the arctic during the Dome Petroleum days. Then the bottom fell out of the petroleum market, & we all became masters at applying Albertas depression error laws - & using sheriff sales to flip our houses to our neighbour for $1, & screw the bank.

 

Agreed the appeal of hard numbers & higher order math has its attractions - especially arouund derivatives, but it is the geologists & resource industry engineers handling risk every day - that have the real advantage. To us, rocks covered in dirt all look the same; but show us a seismic - & we can make it dance. Circles of competence.

 

The downside of engineering is insistance upon elegance; every bridge has to be a masterpiece in elegance, form, & function - & testimony to future generations. Russian & Chinese bridges usually have no such pretensions, & the uglier they are - the longer they usually last. That ability to conceive, & build, over such a wide range is extremely valuable.

 

SD

 

[cpan]

 

I am a software engineer for over 15 years and just started learning about value investing 5 years.  I think the piece that value investing really fits with engineer is the need to understand what going.  As an engineer, I think you have an innate need to figure out how things work.  Same thing with value investing in term of trying to figure out if there is value in a security and why the value is there.  The big difference is that in engineering you can pretty much figure everything out if you put your head to it but in investing there is the too hard bucket, so you have to get use to the nondeterministic nature of the problem. 

[rkbabang]

I'm an IC design engineer full time for the last 18 years, investing is more of a hobby.  +1 to much of what is already written above.  Math, analysis, problem solving, money, ... what's not to like?  There is also a control and trust aspect to it.  Many engineers, myself included, do not like to pay others to do things which we can do ourselves.  There is a very large DIY streak in most engineers.  I also have never really felt comfortable with letting others manage my money, which led me to learn as much on the subject as I could, which reenforced my desire to do it myself.

 

[investor-man]

@cpan -- whenever I see your name, I think of http://www.cpan.org/ (it it makes me shriek in horror!)

 

I also have noticed the abundance of engineers on this board, and being a software engineer for the last 15 years this topic is interesting to me too. To my mind, value investing is not something that is inherently appealing to the engineering mindset, because I know a lot of engineers who will argue to their death in favor of EMH. There are entire degrees, even at Columbia University, the capital of value investing, dedicated to financial engineering, which is grounded in EMH. And when I take a step back from my money and look at EMH, there are some pretty cool engineering problems there: exotic probability distributions for your probabilistic graphical model, monte carlo simulations, various optimization algorithms like gradient descent and the simplex algorithm, etc. -- these are all really cool engineering problems and there are a ton more in the world of financial engineering.

 

But when I ask the question, "what's important to me when it comes to my money?" like everyone else, it's maximizing returns and minimizing risk. I just know for my personal situation and context, risk simply does not equal volatility, and everything I do with my money is to make sure is true: I don't use leverage. I don't trade derivatives. I don't have clients. I'm not living on the income produced by investing. Volatility just isn't a risk for me, so EMH kinda goes out the window, and with that, all of those engineering problems.

 

I do, however, think that one engineering concept does remain, and that is the concept of parsimony. And it's here that I think value investing shines. I like simple models and simple solutions. In the crazy world of Mr. Market only value investing gives you a simple model that has been shown to work: use a company's fundamentals to come up with a value; buy a company trading for much less than that value; wait. It's simple, but that's about the only thing in value investing that I can relate back to engineering, and honestly the connection is pretty weak since "parsimony" is such an abstract concept ;)

[Gamecock-YT]

Given the concentration of engineers, I'd be interested to see what everyone's Myers-Briggs results. I'm willing to bet we have a majority of introvert thinkers.

[investor-man]

Given the concentration of engineers, I'd be interested to see what everyone's Myers-Briggs results. I'm willing to bet we have a majority of introvert thinkers.

 

INTP

[Liberty]

Given the concentration of engineers, I'd be interested to see what everyone's Myers-Briggs results. I'm willing to bet we have a majority of introvert thinkers.

 

INTP

 

I read a Keirsey book on that kind of stuff a while ago and go INTJ.

[writser]

Tangent question: suppose that this forum is relatively overpopulated by introvert engineers (a.k.a. nerds). Does that suggest that the board as a whole has some weak spots with regards to investing? If so, which ones?

[rkbabang]

Given the concentration of engineers, I'd be interested to see what everyone's Myers-Briggs results. I'm willing to bet we have a majority of introvert thinkers.

 

From: http://www.humanmetrics.com/cgi-win/jtypes2.asp

 

INTJ

Introvert(89%)  iNtuitive(88%)  Thinking(88%)  Judging(11%)

 

 

I wonder what the average Aspergers Quotient is here.  Mine is on the high side 34 according to this: http://aspergerstest.net/aq-test/

 

 

[racemize]

There may be quite a few of us that have technical degrees, but aren't engineers (e.g., I have a chemistry degree).  I imagine the same qualities apply outside of purely "engineers".

[greenbriar]

Tangent question: suppose that this forum is relatively overpopulated by introvert engineers (a.k.a. nerds). Does that suggest that the board as a whole has some weak spots with regards to investing? If so, which ones?

 

Not to stereotype, but I would imagine us "nerds" have more affinity for companies like TSLA vs. companies like LULU.

[yadayada]

fwiw that briggs meyer test is mostly bullshit and pretty innacurate. I can get different results depending on my mood. It is also not v well respected in the field op psychology and psychiatry.

[merkhet]

Tangent question: suppose that this forum is relatively overpopulated by introvert engineers (a.k.a. nerds). Does that suggest that the board as a whole has some weak spots with regards to investing? If so, which ones?

 

Not to stereotype, but I would imagine us "nerds" have more affinity for companies like TSLA vs. companies like LULU.

 

I have long suspected that this is why the board tends to have petty squabbles every few months -- well, this and the fact that we're predominantly male.

[rkbabang]

fwiw that briggs meyer test is mostly bullshit and pretty innacurate. I can get different results depending on my mood. It is also not v well respected in the field op psychology and psychiatry.

 

I would expect no less from an online personality test, but for ballpark results it is accurate and consistent enough.  If your mood swings that wildly however you might want to try this one.  http://psychcentral.com/quizzes/bipolarquiz.htm  :)

[randomep]

 

 

I am a hard core engineer also.

 

Now an interesting question: do you ever use your software skills for investing: like

- run monte carlo simulations

- using programming or matlab/octave

- use scripts to grab financial statement data off the web

 

etc

[writser]

Tangent question: suppose that this forum is relatively overpopulated by introvert engineers (a.k.a. nerds). Does that suggest that the board as a whole has some weak spots with regards to investing? If so, which ones?

 

Not to stereotype, but I would imagine us "nerds" have more affinity for companies like TSLA vs. companies like LULU.

 

Yeah, I was thinking in similar lines. We could be too negative about retail because we don't like shopping on average :) . Also, all software engineers here have such strong opinions about operating systems, phones and search engines that it's pretty much impossible to have a discussion about Apple, Microsoft or Google that does not end in a giant flamewar.

[Kraven]

I have long suspected that this is why the board tends to have petty squabbles every few months -- well, this and the fact that we're predominantly male.

 

Predominantly?  A sighting of a female on this board is only slightly more rare than a sighting of Big Foot, the Yeti or the Loch Ness Monster.

[rukawa]

I no longer work as an engineer but orignally studied Engineering Science at U of T. Later I did a Master in Math Finance which is completely based on an efficient market view. Devil Take the Hindmost was the book that convinced me that market are hugely irrational.