Stay in Your Lane
The concept of “stay in your lane” is a lesson that I think many people are going to learn in an ever-connected world where anyone can have an opinion on anything. I touched on this here. Paying attention to who has the attention can be helpful when the person is an expert in the field on which they are opining. Otherwise, it is a recipe for possible disaster. GameStop is a case in point, and this will hopefully be the last time I write about this name. The stock has fallen from a high near $480 to $90 yesterday.
The whole way up last week, there were plenty of cheerleaders for the stock who seized the moment to side with the masses who were “sticking it to the man." Here is the problem. Many of the cheerleaders are by no means experts. Blindly following them into a trade or investment is a terrible idea. Just because someone has been successful in one area of their lives, even wildly so, does not make them an expert in every other field of life, especially investing. My friend Andrew sums it up nicely.
Giving investment advice is something that should be taken very seriously. It is done by qualified professionals who take and pass certification exams in order to practice. Many of my friends are in this role…I am not (that’s why all of these notes end with “this is not investment advice”).
I am an expert in technical analysis (the CMT after my name) and while that makes me qualified to discuss a lot of what is happening in the market, it by no means makes me an expert in other aspects of life. For instance, there are people who read my work, join my calls and engage in discussion relating to the markets. Presumably, they think I know what I am talking about. But, if they had to fix the breaks on their car, I would not expect them to reach out to me asking for pointers. Common sense, right? Yet, a successful media personality and sports bettor says he is holding a stock and his vast following does the same. The same goes for a famous set of twins who have been successful in the digital asset space, tweeting to their followers about owning certain stocks to “stick it to the man.” What makes them experts on the stock market, short squeezes, gamma squeezes, clearing and margin rules? But I am sure that there are many who bought the stocks and are now under water.
Now, the blame does not sit only with the person who has a big following. The bulk of the blame sits with the person who mindlessly follows. It is always better to the do the work yourself!
As always, thank you for taking time out of your day to read my thoughts. If you enjoy it, please like and / or share.
If you are interested in seeing how I look at the markets in more detail, head over here:
*Noting in these pages should be considered investment advice.