It’s good to chat with friends and acquaintances about investment strategy. But not to trade Hot Tips! — unless you are willing to lose said friends.
That said, listening to different approaches to buying stock, bonds, real estate, luxury items and art, can give you good vicarious experience – that’s experience you don’t pay for.
Warning: if people talk about investing as a gamble, a game or competitive sport, give them a pass. As a single person, investing for one, you can’t afford to play games.
Strategies are governed more than we want to admit by fear, greed and pride. These, of course, are emotional sins. We fear making a losing investment, greedily want more than we have honestly earned, or proudly refuse to admit we made a mistake.
So, we must figure out how to overcome these barriers by fostering reason, calm, honesty and determination within ourselves. These qualities lead to getting the knowledge you need to be a rational investor. Remember Spock on the Starship Enterprise? Be him.
IFO knows more than one person, herself included, who lost more than they wanted to lose on the stock market during the Dot Com Boom, which was similar in many, many ways to the Roaring Twenties. Yes, culturally as well as financially.
Today, though markets are again reaching record highs, we are in an unprecedented era of gloom. This would please Marty Zweig, who often said, “The market climbs a wall of worry.” IOW, there’s no euphoria. As long as there is general worry, we don’t have a burstable bubble… yet.
IFO is worried.
With that preliminary background, let’s talk about the Great Depression Syndrome. My Dad had that.
As a kid, he read newspaper headlines about people making fortunes in the stock market (1920s), getting hot tips from strangers in elevators (late 1920s), putting all their savings into that company’s stock (early 1930s), losing everything they had in the stock market (mid-1930s) and jumping out of skyscrapers.
Well! He wasn’t going to get fooled the way they had been.
In those wild days of speakeasies and flappers, his older brothers were running rum in from West Virginia and running numbers in the city. They never were caught because they were politically protected.
That atmosphere seemed the same as investing in the stock market to him – stupid and dangerous.