Investing Doomsday

By Jamie McSloy / February 6, 2018
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Sometimes things don’t go to plan. In a lot of cases, you can look at these times as learning experiences, but ultimately it’s a bad day. There’s nothing more annoying than some guy saying, “Yeah, sure, you had to declare bankruptcy but at least you can learn how to experience happiness without materialism now!”

That said there are learning experiences to be taken.

Take the past few weeks for instance. (For those of you who are reading this in the future, I’m writing this on 6th February, 2018.)

We saw the bubble burst on cryptocurrency a couple of weeks back. Prior to that, people were selling their houses and dumping their grandmother’s pension into crypto. Those people were loud about how blockchain was going to destroy everything and the dollars in your pocket were basically toilet paper.

If you had any reservations to the contrary, then you were a shill or a no-coiner loser and you were missing out on the once-in-a-lifetime gold rush.

Then the bubble burst and all of those people were silent.

Now, I’ve written the go-to guide on Making Money From Cryptocurrency in 2018 already… so we won’t go back and re-tread old paths.

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Let’s talk about something eerily similar though.

The Sky Is Falling Part 101

This morning, I was trying to innocently eat my breakfast. The news was playing in the background.

Everyone is losing their minds.

The stock market is having its worst downturn since either last Tuesday or the beginning of time. Nobody knows the exact details, but it’s bad news.

Here’s where the learning experience comes in.

In the midst of the crypto-boom of late last year, it seems that most people were putting money into all kinds of crypto-ventures without any real investing sense.

They were essentially gambling, in other words.

What’s crazy though is that over the past couple of days, the exact same thing is occurring with the stock market.

The same headlines.

The same reporters who don’t seem to know anything about stocks.

Finally, the same pattern repeats itself: People losing their shit because they’ve dumped a ton of money into investments that they don’t understand and have no control over.

So I guess the first lesson is don’t do this. Invest in things you know about and limit the amount of investments you have that you don’t have control over.

But again, we’ve covered that before.

But here’s a bigger lesson.

Most People Are Headless Chickens

Most people are headless chickens who do things based on two things:

  • Emotional impulse
  • Doing what they’ve been told to do

I have some relatives from a bygone age who have lived for many years off their investments. I once thought that it’d be a good idea to ask them how they learned about investing and navigated those tricky waters.

“It was just what we did. We put money into this because it was a good idea and that because our boss told us to and that thing just worked out.”

They didn’t really have any investment knowledge to speak of outside of diversification – but that was seemingly an accident of chance.

Other than that, they lived through multiple boom periods and several generations of relative peace and prosperity.

If you were to follow the same path they did, chances are you could get burned regularly, repeatedly and into bankruptcy.

Yet this was the investment strategy – do what other people tell you.

The other factor I mentioned above, emotional impulse, is not a mystery to anyone reading this site. People invest for emotional reasons even though they shouldn’t. People invest without knowing the data and analysing the risks.

A ton of people invest with the slightest hint of, “This will make you a millionaire and you’ll be able to laugh at the neighbours who missed out.”

So what’s important about this lesson?

One: Human nature is either your ally or your enemy.

Two: Don’t trust anyone.

The same media that are crying today and the ones that were laughing last week. You get guys who say, “See… I’m right about crypto it was all a scam!” then cry their eyes out because the stock market tanks and they lose money for the same reason they were just crowing about.

Don’t Trust Anyone – Not Even Yourself

How many times have you heard people say, “Success is about luck.”

If you think this, then slap yourself across the face a few times.

Luck might factor into your success or failure. Absolutely. But if it exists, you can’t plan for it.

What you can plan for is creating the best working system you can and factoring in margin of error either way.

Whatever you do, don’t jump into stuff on a hope and a prayer. It might work out, it might not… but it’s a stupid decision either way.

Spend more time learning than jumping. Once in a lifetime opportunities actually roll around frequently and it’s better to miss an opportunity because you were actually ready for the next one as opposed to trying to jump into everything.