Don't Fall For The Trap

**This was originally posted to our clients November 16th, 2021**

Everyone’s getting rich right now.

Everyone’s got cash ready to spend and invest.

Every asset is at or near all-time highs.

Stocks. Bonds. Crypto. Real Estate. Art. New and Used Cars. Watches. Collectibles.

My guess is you’ve heard or read about some average Joe making millions, by getting lucky. Or maybe your friends and family are telling you how much money they’re making from some stock or cryptocurrency.

I keep getting texts from my friends – old and new – about how much they’re making in stock options and altcoins. They don’t know exactly what they’re doing or what the company does.. But they’re making money anyway.

This is what happens towards the end of a bull market. The mania phase.

Everyone’s feeling good. Everyone’s making money. Everyone’s ready to gamble with just a little bit more of their money to go for that moonshot.

The FOMO (Fear Of Missing Out) is real.

It’s probably making you want to dabble in certain asset classes you wouldn’t have ever gotten into.

Speculations like day-trading. Cryptos. NFTs. Call options. Biotechs. You name it.

It’s all exciting and attractive. This idea of making many multiples on your money very quickly. The thrill feels like you’re in a casino. If just one of these moonshots hit, it’ll change your life.

Mania phases like these suck you in like a blackhole. Making you want to invest more and more of your money into speculative ideas.

Don’t succumb to the temptation.

Times like these are not normal. Getting caught up in this market will slaughter the average investor.

It’s fine speculating. But no more than the point at which you’re comfortable having that money go to zero.

The temptation is hard. I get it. I’ve tried my hand at a few things. I’m having fun doing it, too. But I end up losing more money than I make. Just like a casino.

It’d be better if I had just invested all of that money into operating businesses that produce real cash flows. Ones that have defensible moats. Like every company in our Flagship Portfolio.

Investing isn't easy. If it were, everyone would be rich.

But the person who turned $8,000 into $5+ billion on a cryptocurrency that was created as a joke kills me inside. It makes value investing seem dead.

When the mania will end is anyone’s guess. And you won’t get a prediction out of me.

I just know the music will stop eventually. I don’t want you or anyone you know being the one left holding the bag when things turn.

That’s why you should only speculate with money you can afford to lose.

Speculate with money under the assumption it’ll go to zero.

Everything else should be invested in productive assets or saved for your personal expenditures.

Investing isn't about keeping up with the Joneses. It's about making sure you have enough money to live the life you want, when you want.

So make sure you don't fall for the "investing is easy" trap from the mania phase that we're in.

Good investing,Lance