2021- An Earth Odyssey
2021. Another interesting year. With 7 trading days left in 2021, the S&P is up over 25%. For those who have missed out on this bull market, regret is hardly a strong enough word. The S&P index is up 5-fold from June 2009, the bottom of the 2008-2009 unpleasantness.
So, do investors have 5 times the money? No. Why? They got in and out at all the wrong times. Greed gets in them in, and fear gets them out. For those that stayed in, they are up 5 times or more. Some of them have made nothing by investing in every cockamamie scheme their barber or uncle told them about. It doesn’t seem to matter if the plumber and cousin have been broke the entire time you have known them. Caution: just because a person has a lot of money, doesn’t mean they are a good source of advice either. I golfed with a guy years ago, who was worth $100 million. He made it all from the sale of a company but had the same type of ideas as the barber.
Staying put in the market? That’s too easy!! It is? Have you ever been able to do it? Well no. It is way harder than it looks.
Our need to “self-medicate,” by doing something!, is overwhelming at times. “We aren’t just going to sit here and get killed are we?! Yes, I am afraid we are. Just like Warren. We don’t really ever need to “beat the market.” All we must do is stay put and participate in it.
Lies at the speed of light
Today, with the internet, Cable, and radio it is way harder than when you got your quotes from the newspaper and your account balance once a month. We are bombarded by so much advertising couched as “advice.”
To make matters worse, there is no regulation on false claims. Why? Because the crooks aren’t licensed, so they are not regulated. The burden of the government would be to disprove every claim, which would be near impossible with the 1,000’s of scams. Although, I think they need to make a few examples on the obvious ones.
Day Trading, the new version of an old fantasy
I spent a lot of time on day traders while writing my book, Mindful Money. Almost no one declares on their tax return they are employed as a day trader. https://www.wired.com/1999/08/lose-money-fast-day-trade/
Actually, I couldn’t find even one example. Robinhood and other trading platforms have spawned a new wave of day traders. It is a growing scam that entices people not with real returns but with the promise of “it’s possible.” Making money playing Blackjack is possible, as is betting on horses. But in the real world, no one wins at day trading other than the hucksters selling you software, systems, algorithms and other nonsense. With day trading, no capital is created for industry, which is the whole idea of investing in companies.
Some young investors are easily convinced they can be day traders. A majority of them already have been convinced of equally odd ideas, such as someone can declare their own gender, and that racism is the most severe problem the US faces.
For the time is coming when people will not tolerate sound and wholesome instruction, but, having ears itching for something pleasing and gratifying, they will gather to themselves one teacher after another to a considerable number, chosen to satisfy their own liking and to foster the errors they hold.
That is wisdom from the Bible that is more relevant now than ever.2 Timothy 4:3[CV1]
The internet is in its infancy
On any given day in the last 5 years there were on average 640,000 people online for the first time. https://ourworldindata.org/internet. The future of the internet can be glorious or horribly destructive. To become a tool for good, people have to be discerning, and know that values don’t cease when you log in. Take responsibility for those emails that sound so tantalizing, before you forward them. Tell friends that send them, that they are false, and why!
Stay in the real world, check emotions, and never, ever say the four most dangerous words in investing: “This time it’s different” and let’s see what 2022 has in store!
See you next year. (I just came up with that.)
Craig