The Quiet Losers

The Quiet Losers

February 12, 2021

I had just driven home from the office. As I stepped out of the car, my neighbor happened to be outside and said hello.

“Hey, you work with investments and finance, right?” he inquired.

I do.

“Have you heard all this business about Gamestop?”

Yes, I have.

“Man, I’ve been watching Youtube videos about it all day. Spot prices and call options and technical analysis and...!”

As I politely listened to his foray down the rabbit holes of the financial world, my wife could see me through the window. Her face said that my ear was being bent, but I did not mind.

Later that week, I paid a visit to the doctor for a small outpatient procedure. As the doctor began the procedure, he said “So, how about that Gamestop? Pretty exciting stuff, right?”

Captive in the chair, I agreed with him. Mercifully, he was mostly making polite conversation. Knowing I was a financial planner, he was trying to relate to me. I really appreciated the effort.

That same week, walking into the gym, friends greeted me as I arrived. You can likely imagine what they asked me about. Many of our clients were curious as well (and rightfully so!). My own father even asked about what he was hearing on the news about Gamestop and AMC and Robinhood.

Some of these conversations skipped from headline to headline. Once folks mentioned Gamestop, they wanted to discuss Bitcoin and Tesla and silver--the hot financial topics of the day.

Stepping away from the details of these topics, there were two common threads throughout these conversations I would like to pull on:

What if we had invested in those? Either they noticed a large increase in something’s price, or they knew someone who knew someone who made a lot of money. The feeling of being left out was tugging at many of them. Investing in a blossoming company or asset can look painfully simple when we look backwards.

I have no idea how this works. Many of these conversations became someone eventually admitting they were confused not only about the details, but the basics of what really happened.

Although the actual names might be new and fresh, the underlying ideas are timeless classics. They harken back to the days of the cave men, when one man grunted to the other that he heard about a resourceful chap who found all the food he wanted on the other side of the mountain.

They harken back to the days when European men heard of those resourceful merchants who braved the ocean blue and came back from “India” with spoils and riches.

They remind us of the great Gold Rush when gold nuggets in Alaska awaited those willing to make the trip.

Just like today’s hottest stories around wealth, it takes longer for the full story to emerge.

Yes, one caveman chanced upon a life’s supply of meat and berries over that mountain. That kind of success story travels like wildfire. What does not travel as readily, however, are the stories of those who found nothing on the other side of the mountain. The stories of those who don’t make it back at all are even less likely to reach the ears of others.

Similarly, merchants don’t brag about months spent traveling for a meager return, nor do the prospectors who spent many long weeks searching for gold only to turn up empty-handed.

In today’s raging battle for the public eye (or, in the case of daily conversations, something interesting to talk about), we hear about the winners and the big numbers. If someone did well for themselves, they are more likely to talk about it. Thus, we are more likely to hear about it and share it with others. Conversely, we are less likely to talk about the mistakes we made! No one likes admitting they lost money or fell into an investing trap. The result: it appears like more people are making money than losing money.

If history has anything to teach us, the winners are loud and the losers are quiet. Investing is a perfect example of this, which distorts our perception of risk and reward.

Remember: for every person who sells something and realizes a profit, someone else was on the buying side of that transaction, and they may not have been as fortunate.

That feeling of “missing out” out on something we do not understand is dangerous. It separates too many people from their hard-earned money. Fear of missing out (FOMO, as the younger generation calls it) may occasionally serve us well, but usually we have to fight those instincts. Especially with investing, blindly jumping on the bandwagon is not a reliable recipe for success.


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