What can you stick with for an unreasonable amount of time - do that.
This one is tough to internalize - starting is so easy. Showing up a few times is easy. Every day is HARD. Yet that's where the big money is. Skills, networks, knowledge all compound for those that stick with it.
So while we always strive for the best investments, it’s the ones we know we can hold when times get tough (aka - you're losing a TON of money) that do the heavy lifting in the portfolio to keep investors from panic selling.
BTW - while I'll share each of these notes with my kids, I too am guilty of forgetting these principles at times.
Aka these notes are just as much for me as they are for them.
Evergreen Signals:
Robinhood was added to the S&P 500 this week. Yes...Robinhood.
‘Wall Street Bets’ favorite weapon is now one of the most valuable companies in the world.
Sidebar - I had an interviewee (who was 10 mins late) tell me this week that he LOVED Wall St. Bets and supported its mission to take down traditional finance.
To which I replied, “you know we’re an investment company, right?”
Anyways, I'm not in love with the Robinhood news.
Gamified investing, short-term thinking, zero-day day options (ZERO!!!).
This is not investing. This is a casino.
No literally. I’m not being dramatic. Robinhood takes sports bets now. Soon we’ll see Robinhood pushing parlays on Nvidia options and the Over/Under on the Broncos game.
That being said, I reluctantly like how it's teaching the next wave of investors to be more comfortable with investing concepts.
Frankly, it's better a 22 year old with a $500 account lose their shirt on an options strategy they learned on TikTok vs. $50,000 when they’re 45.
This is the touch “the hot stove” style of teaching, which is a painful but incredibly effective way to learn.
Out of the Woods:
Apparently a company named Applovin also joined the S&P 500 this week.
Unfortunately, I still can't take this company seriously as every time I hear its name I just think of Fogell from "Super Bad" aka "McLovin".
In one of my very few rebellious teenage moments, a couple buddies and I "borrowed" my Dad's Crown Victoria (a boat of a car) and drove to a Swap Meet in Pico Rivera to try and score our own McLovin fake IDs.
An older, cooler kid told us we just needed to drive around flashing our hands up as if we were holding an ID and some nice criminal would flag us over to help us secure our ticket to high school popularity.
Well, this didn’t work.
I was later told that we must have looked like idiots driving in circles flashing signs as nobody was going to try and sell fake IDs to an undercover cop car.
Not my finest moment.
But I desperately wanted to be able to buy the cool high school girls Boones Strawberry wine (don't laugh, this was big in 1995). For some reason I thought this would be easier than just talking to them.
But through sheer grit and determination (sticking with it), I was able to secure that cheap booze soon enough.
On second thought, I might not share this note with my kids.
Anyways, we all do dumb things in our youth. Active trading on Robinhood probably fits that bill.
But if we’re lucky, Robinhood will age about as well as Boone’s Strawberry Wine - which is to say, not at all.
Brad Johnson
Managing Partner & CIO
This summary is for information purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities and may not be used or relied upon in connection with any offer or sale of securities. The information and statistical data contained herein have been obtained from sources that we believe to be reliable but in no way are warranted by us as to accuracy or completeness. Historical examples shown do not, nor are they intended to, constitute a promise of similar future results. Each investor’s return will vary based on a variety of factors.
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