Investing Shouldn’t Be This Exciting
On the morning of May 8th, I went to my kids’ elementary school for career day. Speaking in front of a class of 5th graders I asked, “Do any of you know what a stock is?” Hands shot up, and the first kid to answer said, “Stocks are things you buy and then you can sell them to make money.”
“Like Bitcoin!” another yelled.
A few of their classmates nodded in approval.
I tried to explain how stocks were ownership interests in companies and the value is tied to long-term earnings… blah blah blah. But my version was boring. Whether the human is 11 or 50-years old, we are wired to prefer excitement. Put money in, get more money out, and do it quickly. Charts that move and light up like slot machines are exciting. White papers explaining efficient frontiers are not.
So, it was no surprise when I clicked into Business Insider on May 13th and saw the following three articles posted in quick succession:
10:10am - Roaring Kitty is back on social media — and meme stock GameStop is soaring
11:35am - GameStop's 118% spike is its biggest in 3-plus years after Roaring Kitty returns with a meme
These are some of the most clickable headlines ever written. For those that aren’t familiar, a guy that goes by the online name of Roaring Kitty posted a meme and GameStop’s share price doubled in value. No change in earnings, no change in business outlook, no change in anything. Just a quick post to Instagram of a guy leaning in while playing a video game and the meme stonks were back.
Four days later the fun was over. On May 17th, the new Business Insider headline read:
Most of the people that got into this trade lost money, just as they did when this last happened in 2021. Some of them will blame the illuminati, some of them will blame the government, some of them will blame the company, and some of them will just blame themselves for not being able to trade fast as their friends on the message boards. But like a gambler who blows a few grand at the casino while partying with friends, most will be back to do it again in the future. Not because it is a good idea, but because it is a way to make the process of stock investing a little bit more exciting.