Caution: When everyone is suddenly a stock market pro

He knows the next megatrends – the metaverse is said to be very “hot” – and knows which companies are on the verge of a breakthrough. And, of course, he has a golden touch: He made a 35% profit with this start-up, a 50% increase with that biotech company, and so on. You can imagine.

It’s just funny that in all the years I’ve known him, he hasn’t been interested in the ups and downs of the stock markets at all. He mostly wanted to talk to me about cars and football. Now he seems to have become a stock market pro overnight. Don’t get me wrong – I don’t begrudge him his profits. However, I suspect that he only mentions his success stories to me and keeps quiet about his failures.

A glance at my Bloomberg terminal shows that many former high-flying investments have faded like shooting stars. Care for a few examples? The highly acclaimed “disruptive” company Peloton (which sells luxury exercise bikes) has lost three quarters of its value from its peak. Pandemic winners TeamViewer (-73%) and Zoom (-44%) from the IT sector have brought investors losses this year and the Swiss stock market newcomer “ON Running” is also trading well below its high.

Not even the beneficiaries of the “green revolution” have brought joy. Vestas Wind: -27 % since the beginning of the year, its competitor Orsted: -33 %. And the share price of Beyond Meat, the producer of plant-based meat and darling of the hip investment community, has almost halved since January.

Almost 40% of all stocks in the Nasdaq 100, which includes many growth companies, are trading lower than at the start of the year, while the broad Stoxx Europe is down around 30%. The stock markets in China and Brazil are down in 2021, the Nikkei in Japan is flat. Not even gold and silver were able to gain.

I could extend the list indefinitely. But I think it’s clear what I’m getting at: my brother-in-law must have had an excellent nose to avoid all these pitfalls. His performance is probably much more modest than he pretends. It is hardly plausible that he has achieved such an impressive performance with a diversified portfolio.

Or he has achieved the dream return by accepting great risks. Like a driver who drives aggressively and disregards traffic rules in order to get home faster. This can end badly, but the strategy is irresponsible and guarantees an accident in the long term. Investing is a marathon, not a sprint. And it’s certainly not a car race.

With this in mind: Navigate carefully!

Yours, Mark Stock©

Mark Stock is a member of the Point Capital editorial team. “I am a stock market enthusiast and am passionate about economic history. I have been following the ups and downs of the markets for years and, of course, invest myself – preferably in shares. So my name says it all. Every month, I take up what I consider to be an exciting topic. And since the focus is on the content and not on me personally, I write under a pseudonym.”