Market Swings Drive Opportunists

TruePoint Capital

Nobody can look away from a car crash because chaos drives our curiosity…

Everyone talks about peace and getting along, but people would get bored because there would be nothing to talk about. There’s more fun and excitement in disorder and dysfunction. Nobody turns on the TV to watch paint dry. They would much rather watch other humans making idiots of themselves on reality tv.

This basic human nature of being attracted to the commotion and the roller coaster of life also drives our investing habits. Wall Street knows this, and they prey upon our need to satisfy our curiosity. When it comes to investing, nobody wants boring. They want excitement.

During the gold rush of 1849, gold speculators rushed to California, hoping to cash in on just one gold nugget that would set them up for life. Most speculators never realized their dreams – many going home broke or even indebted from borrowing money to fund their travels.

However, not everyone got caught up in the excitement of the gold rush. A group of enterprising entrepreneurs made a killing from the gold rush. Still, it wasn’t from finding gold from selling tools or providing food, alcohol, shelter, or services to the thousands of travelers flocking to California to find their fortunes. Ironically, it wasn’t the ones heading for the hills that were making their fortunes.

The entrepreneurs took advantage of the miners who were making all the money.

Much hasn’t changed since the gold rush. Today, instead of chasing physical gold, people hope to cash in on a different kind of gold – meme stocks, cryptocurrency, or non-fungible tokens (NFTs). Just like gold, these shiny new objects fuel the imagination. People like the excitement of chasing something new – some merely for the thrill of the hunt.

Most of this new generation of speculators will end up broke or even in debt (from either trading on margin or borrowing to fuel their investments). And just like during the gold rush, there’s a whole other segment of entrepreneurs making money – not on the markets – but those playing in them. This group makes money whether the speculators make money or not.

Did you ever wonder why there are so many tv shows, XM channels, social media accounts, daily experts, software applications, and so many other sectors of the economy dedicated to or covering Wall Street or the speculative crypto and NFT markets?

Because there’s money to be made – not in the markets – but on the fringes.

A Google search of “Day Trading Platforms” gives you 220,000,000 results! Think about that. Just that segment of Wall Street – a platform for making daily trades – generates that much attention. It’s no wonder that news about Wall Street, crypto, and similar investments will feed the talking heads 24 hours a day, seven days a week.

Meme stocks, crypto, and other shiny new investments get so much daily attention because these markets are so unpredictable and volatile. The fact that nobody has come up with an algorithm to predict the movement of stocks accurately and consistently should tell you something about the predictability of the stock market – it isn’t.

People love the excitement of speculating, and the ups and downs of the markets that crown winners and make losers daily is an addiction many investors can’t resist. With billions (I’m guessing) behind all the stock forecasting done by so-called experts, talking heads, trading platforms, and shows, it’s a massive machine that feeds off this guessing game and the crowning of the movers and losers of the future.

Most investors suffer from FOMO (the fear of missing out) when it comes to buzz-worthy investments and find it hard to resist throwing themselves into the fray. But there’s a group of investors immune from the gravity field of shiny investments.

These sophisticated investors aren’t chasing the thrill of the ups and downs of the public markets. These investors prefer the thrill of walking away from their jobs through investments in the private markets – investments in tangible assets like commercial real estate (CRE) that offer much more than the “potential” of a gain. No, these investors are interested in the reliable and consistent passive income, tax benefits, and growth that CRE offers.

Indeed, CRE will never have the drama of the large swings that Wall Street and crypto offer investors. It’s also true that CRE will never generate enough buzz or hype to support one 24 hour news channel – let alone multiple – simply because CRE is boring and doesn’t drive the type of interest that advertisers covet.

For building wealth, smart investors are satisfied with boring because it’s boring investments like CRE that the wealthy have relied on for decades to separate themselves from the pack and to break the chains of a time clock.