If 2020 wasn’t a wild enough year in the stock market, the beginning of 2021 proved to be 2020’s sister, except with red hair and bangs.
Back in February, I had colleagues, friends, and acquaintances reaching out and asking what my plans were regarding purchasing GameStop and AMC stock.
“I don’t have any plans,” I responded.
They all seemed surprised.
“I believe in investing, not gambling” is usually my standard response.
I hate to burst anyone’s bubble, but all of the meme stocks (or pump-and-dump stocks) are just speculative, trendy, gambles — just like Dogecoin in the cryptocurrency world.
All of the speculative “investing” and “trying to outperform the market” this past year reminds me of the bet Warren Buffet took a little over a decade ago.
Back in 2007, Warren made a bet against hedge-fund manager Ted Seides that the Vanguard S&P 500 index fund would outperform a basket of hedge funds over 10 years.
Now, I know the youngsters on Reddit most likely weren’t planning to hold the meme stocks for a decade, but when do you sell the stock? When do you buy it? This is where the water becomes murky.
Warren’s bet “for the market” is one of the most powerful investing lessons, and it’s a shame that we don’t talk about this with young investors.