Step Right Up, Folks... And Lose Money

Step Right Up, Folks... And Lose Money

It has never been easier to lose money in the stock market...

Between special purpose acquisition companies ("SPACs"), meme stocks, cryptocurrencies, and now artificial intelligence ("AI"), investors seem to be chasing one bubble after the next.

And each one ends the same way... and it's not with the air slowly seeping out.

Yet, it's happening again.

And it'll happen again...

And again...

SPACs are passé, but IPOs are back...

And with any kind of IPO resurgence, this means a bunch of companies that should never go public, will – this year, look no further than VinFast Auto (VFS) or Sacks Parente Golf (SPGC) since each went public…

Doesn't matter which is which, they both crashed!

The revival of crypto is sure to spawn a new crop of crummy coins and cons.

As for AI... it has a resilience not seen since the early days of the Internet, even though there are really just a few public companies that can genuinely lay claim to AI.

Here's the thing, and it's something I've written in the past but continues to confound me...

With thousands of publicly traded companies, why is it that investors tend to gravitate to the likely losers? Or, as I recently wrote, the "financially fragile"? Or companies so speculative that chances of making money with them are likely less than buying a scratch-off at the grocery store?

A big reason, of course, is human nature...

Making money is fun, but making it fast is even better. Fear of missing out ("FOMO") is a powerful motivator and, let's face it, you only live once (“YOLO”).

You've done it... I've done it... heck, even the brilliant Isaac Newton has done it. Or as one of my followers on Threads put it...

FOMO ?is like a magnet... It just pulls you in. YOLO gives you an alibi. It's why traders trade and gamblers gamble.

But there is another way...

(To read the rest, please see link in comments....)

Elliot J Edelman

Seasoned Equity Trader, Analyst, Content Writer, Coach, Programmer, MBA

1 年

And what about NFTs? I didn’t fall for any of these new products. There has got to be a legitimate fundamental reason for the product and a real intrinsic value not just what some fool Is willing to pay.

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Harshad Dhuru

CXO Relationship Manager

1 年

thank u so much for sharing

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Harold B.

(Retired) Chief Investment Officer Kauffman Foundation & American Century Growth Funds - Venture Investor/Board Member - CFA FAS Board of Regents - Quant and AI Strategies - Congressional Testimony

1 年

You forgot insanely important zero dated options useful to institutions and hedge funds seeking to hedge one second, one minute and one hour price volatility. Remember when markets served capital formation and price discovery functions?

Kevin Cope

Chief Investment Officer at C4M Global Advisors, LLC. and Cope Connelly.

1 年

Great article, Herb. It brought to mind two quotes of which I'm fond; Plato said, "Those who tell the stories rule society." The worst companies for investment are often led by people who spin the best yarns. And what ends up happening to those investors who buy into those stories? As your picture hints, PT Barnum used to say, "Clowns are the pegs on which the circus tent is hung." Sir Isaac did dodge the tulips, but couldn't resist the South Seas "opportunity."

Herb Greenberg

Former Financial Journalist

1 年

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