On tech investing for a non-techie As I’v

On tech investing for a non-techie

As I’ve often explained, I have no techie skills. I don’t even know what most of the words mean. Yet I invest in a lot of tech stocks. How do I do it?

I was brought to write this by rereading my post #38019 (Pure Storage – Additional Evaluation), and reading a lot of the posts by some of you guys who know a lot more about the tech aspects and arguing over arcane issues with regards to Pure and Nutanix where I don’t even know what you are talking about.

What my evaluation was based on was mostly the numbers Pure was putting up: accelerating growth rate, operating margin, cash flow, profitability, customers, partnerships, market share. That works for me. Clearly Pure has stuff that its competitors don’t have or it wouldn’t be growing as it is. I don’t need to understand how it all works.

Look when they say:

We expect NVMe to grow very rapidly in our portfolio, eventually extending to most of it and part of our competitive advantage is we were first, we have the performance of the underlying software and architecture to allow NVMe to be most effective and fast. And it’s been driving a lot of our growth in in customers. Frankly we are the only player that can provide the performance necessary to address their application environments. I will just add to that our approach has really been a software centric one.

When I read that, do I have to know what NVMe means? (I don’t have a clue). But what I know is that it’s something important and that they are way out ahead, and expect to stay there.

And it’s not just high tech. If I was investing in a restaurant chain (which I don’t usually), I wouldn’t know how to run a restaurant. I’d look at the numbers, and the special sauce (pun intended). When I was in LGIH, I didn’t have a clue how to build a house either.

Just a reflection.



Scorsese Translation: money talks bullsh*t walks

And this would be fascinating philosophical interpretation of word BS. Just think of billions of hours spent by professionals focused on deep analysis of things that are not BS at all but really do not matter nearly as much as how the cash is flowing.

This is my take on Saulinian Analysis. Money talks BS walks.i personally will never make another investment without first considering this Rule #1. Ludicrously simple as it sounds, in age of noise and distraction and hype and fear mongering it’s easy to forget.


Last night just a bit before seeing Saul’s PSTG post. I was thinking that I might try to do a little writeup on them this weekend. Since he beat me to the punch, I will plan to try to do a quick little projection of future cash flows and compare those to the present enterprise value and what the enterprise value adjustment for net cash position could be at those future points to see what type of potential a present investment in PSTG could have.


One reason I like tech investing is that you can narrow down the field of competitors in the world. Restaurants, everyone. enterprise grade flash drives, only a few.

With PSTG, and lets use the example of NvME. Either management at Pure is lying (or misinformed), or management and other industry “experts” in competitive products are lying (or misinformed). But both is not the case.

Mauser and I have discussed this in great detail in the pat on NPI. Being an industry insider, although counterintuitive, is a HUuuuuuggggeee detriment to successfully investing in that industry.

With PSTG, we know enough that NVME is the future of storage, it enables far ore efficient data throughputs, etc., and that PSTG (gee, so much like ANET) is, and will be the first to market with this technology, and by at least a year.

Now, someone explain to me how it is, if what PSTG is doing is so easy, WHY MULTI-BILLION DOLLAR COMPETITORS are at least a year behind? I am told, yes, NvME is a standardized technology, so everyone can do it. Really!

Yes, everyone will be doing it a year or so after PSTG starts using it, but by then, won’t PSTG have moved beyond first generation to second generation and so on.

Industry insiders get stuck on the common sense, workman, rules of thumb. Nothing extraordinary here, its all been done, and the behemoths that be will get around to it. Sure, sure, and sometimes that becomes what happens.

But in the real world, with every material change in technology paradigm, it is always a new company that comes along to disrupt it.

Apple disrupted cell phones when the smart phone came to be, ANET the cloud network, QCOM 3G…there are dozens of examples we can cite. Always, or nearly always (someone can give me an example) a new disruptive paradigm in technology and i is an upstart that takes it away from the behemoths that dominated the previous paradigm.

This is of course well understood now, thus once would think incumbents would be better at defending their turf. But that is the problem, they are DEFENDING! While PSTG leaps forward in a fearless manner, with no turf to protect, and with a mission to remake the industry.

Kudos to DELL, VMWare, and EMC. To differing degrees, all of these companies (that are one now but operating as if not) have gone on the offensive to try to dominate new technology paradigms. VMWare vs. Nutanix. Cannot say who is #1, albeit, the bulk of evidence indicates Nutanix, but I would like a figure as to how many VMWare companies that Nutanix has gone in and become the dominant vendor.

EMC, although still with plenty of turf to spend, by PSTG’s own admission, understands flash.

Numbers talk. Numbers are the truth detectors of the technology world.

both PSTG and NTNX are kicking numbers relative to competition. And these numbers are consistent with the narratives that much of the press and the company put out there.

Not so much consistent with the narratives the larger competitors put out there.



Mauser and I have discussed this in great detail in the past on NPI. Being an industry insider, although counterintuitive, is a HUuuuuuggggeee detriment to successfully investing in that industry.

And let’s not forget the now infamous saying from Denny…”We cannot know what we cannot know…so follow the money”.

Simple…yet profound and in that single sentence encapsulates Saul’s post.

I have no doubt that industry expertise has some advantages…but only if that same individual is a savvy investor IMO…if I had to choose one over the other it would always be the latter.


Bechtolsheim the founder of Arista made a good chunk of his money not from his startups but in his 100K bet on the early Google (which is now valued at more than a couple of billions).

There were no numbers then. Zero.

It could have been a strike of luck but I don’t see a non-engineer investing like that in something s/he cannot see and cannot even imagine. You need to be able to imagine. Being technical just show you the realm of possibilities. We are not talking about magic or pie in the sky here.

That said, making money in the public tech stock market is more than understanding the technology employed. But I still think that this understanding does give the investor an edge. or maybe that is just wishful thinking?

a business throw out financial numbers and metrics but what is behind that? the business model? some technical advantage? better execution?


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The ability to cut through all the jargon and arcane analysis usually associated with investing coupled with your years of success as an investor is what drew me to this board and what keeps me here.

OK, I am a bit of a techie, but I admit the usefulness of my 30 years experience in IT is growing stale rapidly. Technology goes from nascent to obsolete very quickly. Yet, when I started to follow this board and studied your knowledgebase (time for a refresher on that) I discovered that an in-depth knowledge of product/service offerings was not necessary. And 3rd derivative analysis of arcane ratios and whatall also was not necessary, let alone an understanding of “candlesticks,” “head-and-shoulders,” “Bollinger Bands,” and what have you.

A few simple numbers and ratios is all the math required. And attentiveness is mandatory. I think more than anything I’ve learned that investing is a process, an activity rather than a series of disconnected events marked by trades. Buying, selling, even doing nothing is an outcome, not the inception of an investment decision.


Saul, The ability to cut through all the jargon and arcane analysis usually associated with investing coupled with your years of success as an investor is what drew me to this board and what keeps me here.

It’s great to have you here Brittlerock!