The Ten Things I Hate About Investing
TEEN LOVE LESSONS ABOUT INVESTING
Some people learn everything about love from classic teen romcoms and find their love in high school. For others, it takes years of “practice” to find the love of their life.
Investing can be similar to teen love - simple, confusing, heart breaking and wonderful all at the same time. Inspired by the teen romcom classic “10 Things I Hate About You”, which was filmed in Seattle and makes me nostalgic, here are the 10 Things I Hate About Investing and what you can learn from them:
1. I hate that you don’t guarantee returns
People assume that investing means guaranteed growth. It doesn’t and you could end up losing your investment.
Lesson: Teen love often begins with one person not willing to commit for fear of rejection. Investing is similar in that there is no guarantee of success. Careful analysis of the investment and your personal risk tolerance will help your find your investment Romeo.
2. I hate that you encourage action without education
Investment trading apps like Robinhood and CNBC shows like Mad Money encourage you to jump into trading individual stocks and options.
Lesson: You should avoid falling for the first investment tip you meet and should spend time getting to know more about any investment before going all in. In the beginning, you may want to minimize your risks and spread your love around with a diversified portfolio full of stable “nice guy” ETFs rather than the “bad boy” IPO.
3. I hate that you are used as an excuse to spend
Buying shoes that you’ll wear more than once or a holiday house you might use two weeks a year are not investments, but personal consumption.
Lesson: “A Diamond is Forever” is not a investment strategy but a 1930s marketing campaign that made a diamond engagement ring the true sign of a groom’s love. Look beyond the investment marketing and consider whether the investment is designed to make money or satisfy a current need/want (very few purchases are both).
4. I hate that you make people really emotional
The stock market makes us emotional with a fear of missing out and greed for more being bigger drivers of stock prices than their P:E ratios.
Lesson: Let the heart handle the emotions of love, but use the logical brain and long-term research like Modern Portfolio Theory to guide your investment strategy.
5. I hate that it takes time to fully understand you
There is no magical formula for love or investing and each person’s path is their own to follow.
Lesson: Teen love (especially the movie version) is all about the awkward getting to know you moments. It takes time to understand investment basics, but it’s time well spent and there will be awkward moments.
6. I hate that you create investment FOMO
Nothing feels worse than not having a date to prom when everyone else is going. But not being invested in the hot stock when it seems like all your friends are might be a close second.
Lesson: Everybody has their own timeline for love and investing so make sure your investment strategy is right for you right now and ignore the noise of other’s success.
7. I hate that you can scare people into sticking with cash
Just like teen heartbreak can make someone question the idea of love, a stock market crash can cause panicked people to stick everything in cash.
Lesson: Love and the stock market are full of ups and downs. The sooner you get comfortable with working through the downs, the more successful you will be at both. In investing, your cash is losing value if your rate of return is lower than the rate of inflation.
8. I hate that you ENCOURAGE PEOPLE TO TALK ABOUT THE WINS BUT NEVER THE LOSSES
Every dinner party or dental conference includes at least one person bragging about buying Nvidia, Apple, Crypto or Widget.com before it blew up. Rarely do those people talk about the AIG, Pets.com or Widget.com stock they bought right before the big crash.
Lesson: We love to share the highs in our lives but sharing the lows can be embarrassing. Everybody has experienced heartbreak and every investor has had a loss. Don’t let either get in your way of trying again.
9. I hate that you make it seem like current returns will last
Investment returns are used to sell funds. However, prior returns are not a guarantee of future returns.
Lesson: “Love is a practice. It’s something you do, not something that just happens to you.” Investing is similar, in that you must make it a practice to invest and understand that like teen love, there will be ups and downs.
10. I hate that you make it seem like there’s a perfect time to invest
Hindsight is a beautiful thing and that’s certainly true of investing. Despite many professional investors trying, the market can not be timed.
Lesson: In investing, think about this Chinese proverb - “the best time to plant a tree was 20 years ago. The second best time is now.”
Unlike teen romcoms that have nearly identical plots, each investor is different. You can schedule a consultation with JNG Advisors today to learn more about the investing opportunities you have as a dental entrepreneur.