When you think of investing, I bet the words ‘on-the-edge-of-your-seat’ and ‘casino’ don’t exactly spring to mind. Least I hope not! Boring and slow sounds more like it. But when it comes to investment news that dominates the media, especially during the pandemic, a word that comes to mind is fun. With several shots of FOMO. From cryptos to GameStop to NFTs (pixelated images, anyone? Thought not!) markets began to look more like one of those gambling scenes in a movie than a wealth-building machine.
But investing is no game. It’s the ticket to your future. It can transport you from where you are now to where you want to be. If only you’ll let it. It’s how you’ll get to live the life you truly want, doing more of the things you love and less of the things you hate while being able to leave something for the next gen. To give them a real kick-start in life. Read here the hidden price you gotta pay to get the reward from investing!
But none of this dream-talk is ever gonna be able to manifest itself if your portfolio is too interesting. If it keeps you awake at night. Forever checking share prices and whatnot. Nah. That’ll just destroy your future. The less you look at prices the less you feel the need to act on them. And that usually means selling on the cheap.
The pandemic FOMO machine
What we saw during the pandemic was the powerful force of FOMO. It was the glue that stuck it all together. Remove it and all you’ll have left are a few idiots pumping up the value of silly things. But FOMO rallies fool (almost) everyone.
They want a slice of these juicy returns, too. They do not wanna be left out. They want it in the hope that they can sell it (to yet another fool) for a greater price. And sit on some comfy returns. It’s safe to say that this whopper bubble has (hopefully) burst. But just look at how easy it was to get swept up in the mess of it all.And you don’t hear of the 99% who lost it big. No. Cause that’d be too boring.
Slow and steady wins the race. It always will.
Wealth-building takes ages and it doesn’t (in 99.999% of cases) come about through profiting from meme stocks, I’m afraid. However interesting and fun that may sound. If your portfolio’s moves are boring you (so not up 40% one day then down 50%) then you’ve nailed it.
But if they’re too exciting that you can’t get enough of it, that’s when you could land in trouble. While crytpos have delivered some pretty steamy returns, it was only true for those who actually held onto the stuff. Through thick and thin. But most (sadly) sold out when prices tanked. Things got too heated so they left. Leaving a ton of wealth on the table.
When it comes to investing it should be slow — and boring. Like watching grass grow or watching paint dry. That slow. Or, if you’re anything like me, it means watching that pot boil which (after many years) I’ve discovered only actually starts to boils the minute you walk away! But I say the slower the better.
Slow is sustainable. Slow is what will bring you those returns over a long, long period of time. Thanks to compounding. Isn’t that what you want? Rather than a couple months of to-the-moon followed by years of to-the-ground.
You can’t fight gravity
Many of these meme stocks are way, way down . And many growth stocks that listed during 2020 that enjoyed a post-IPO surge are now rock-bottom. Momentum (and investor appetite) has clearly dried up and many people were left holding the (goodie-less) bag. Even Cathie Woods with her famous ARK ETF that invested in all those unprofitable growth stuff the ones that retail investors couldn’t get enough of delivering 40% returns year-on-year for the past 5 years has already tanked this year, by 32%.
There’s a saying that ‘what goes up, must come down’. Things will always revert to their mean. And settle at a price (and valuation) that reflects their true worth! Not their pumped-up, exaggerated worth, reflecting years of low interest rates with a huge dollop (more like several) of stimulus piled on top of it.
Fear not, dear readers! Leave all this work to Mr Market. He’ll sort it out. In the meantime, don’t get caught in the crossfire of overheated and frankly overvalued stuff. We’re better off sticking to our boring (aka non-stomach churning) investments. Like all your diversified stuff. From your stocks to your houses. And then sit back, relax, and let them do all the hard work. Before you sit back though – read here how to put your money to work for you!
Boring can be brilliant
See, your portfolio being boring and slow doesn’t mean it’s uninspiring or missing something. It just means that it’s on the right path. To financial freedom. Nothing ever worthwhile came easily. Losing-it-quick usually follows making-it-quick.
So we want slow and we certainly want boring. And more so, it’s what we need. If our portfolios were so interesting (aka having whopper highs and lows all the time) we’d be glued to it. Fixated. Stressed. We’d be fretting over where share prices are heading and whether the next time we look at our holdings, they’ll have shrunk. Quite massively.
All this short-term stuff will lead us to make stupid decisions like selling at the wrong time (after prices have already tanked) or buying at the wrong time (when prices have hit ATH). But having a boring portfolio, it’ll gently plod on. Come rain or snow. It’ll keep going. No matter what. Psst: read here how to unlock the power of investing.
So focus on constructing a portfolio that’s wholesome and sustainable. Able to withstand anything that gets throws its way. Because owning a handful of unprofitable stuff is much like blindfolding a monkey asking him to hit the bullseye. Near to impossible!
Rather, cast your nest wide. Invest in many, many areas. I believe there’s always room for growth and innovation in your portfolio. There must be room. After all, it’s all this stuff that solves the world’s most complex problems. Think biotech, think AI. But too much of this stuff and you risk your portfolio walking out during a thunderstorm with no wellies or brolly. Not a wise move.
The more diversified you are, the less you’ll worry about what each of your holdings are up to. Some will go up while others go down but they won’t all go down (or up) together. Giving you peace of mind and the ability to get on with your lives in the comfort that your investments are very hard at work for you. Without disturbing you in the slightest bit.
So yeah, boring doesn’t mean you aren’t investing in cutting-edge tech or the most exciting markets it just means you’re balancing risk. In a smart and sensible way. Nothing lasts forever.
I wish I had a crystal ball with me but the only way is by investing in it all. In different sizes and sectors.
So yes, I think that boring can indeed be beautiful!
And it’s time we put the groove back into it.
Disclaimer: This blog is not investment or financial advice. It is my opinion only. This blog is not a personal recommendation to buy/sell any security, or to adopt any such investment strategy. Always do your own research before you commit to any investment.