22 Immature Beliefs About Investing That Can Destroy You Financially

Tim Denning

There’s a lot of noise about stocks and crypto. This is your survival guide.

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Photo by Jakob Owens on Unsplash

Social media chips away at your financial psychology.

There is so much money talk. Your mate over the fence bought a Lambo with the returns from his growth stock portfolio. Or a lady you follow on Twitter made a million from betting on a coin with a dog’s cute face on it.

Everyone seems to be getting rich. They get to buy back their time and you don’t. It can be painful.

As a finance guy for most of my career, this new investing trend — led by investing apps, crypto and social media influencers — is killing me. Immature beliefs about investing can wipe out a lot of what you’ve worked for. Here are twenty-two immature beliefs.

Investing is the smartest thing you can do

Nope. I love investing. I believe you need to invest some of your money to buy back your time in the long run and do more forms of work you enjoy. But…

Most investing is actually gambling. Read that again.

When you don’t know what you’re doing, you’re really gambling. America loves gambling and that’s what a lot of people are doing. They do zero research, they listen to opinions, they take enormous risks unnecessarily, and they brag about their gains.

Investing culture has exploded. With it, gambling has become an accidental trend. Seeing people gamble and lose is devastating.

“Have fun staying poor”

This quote I see a lot with online investors is the epitome of immaturity. Someone’s financial position is none of your business. Investing isn’t a measure of strength or masculinity. How much money you’ve made from investing doesn’t determine the quality of your life.

The price of an asset can go up or down. That means all of us have a 50% chance of looking smart. Poverty can teach you a lot, actually. Being rich can teach you a lot, too, about the worst parts of humanity.

Buy the dip

Social media can pump asset prices. You could even argue Elon has become a professional at it by pumping and dumping assets using his billions of dollars and millions of fans who trust him.

Dips in prices happen for a reason. Aimlessly buying an asset when the price goes low isn’t the answer, especially when strangers are double-daring you to. Not buying the dip and thinking deeply can cure a lot of financial pain.

A dip can be a discount. A dip can be a prolonged bear market too.

Focus on price targets

My price target for bitcoin is $289K. I calculated this by taking my current follower count and multiplying it by 1 — Dr Parik Patel

A price target is a guess. They’re written by accidental fortunetellers. Who cares what the price target is for a stock. Who cares what experts who are paid based on how bold their predictions are say.

Who cares about targets. Focus on actuals.

“Diamond hands, baby”

This immature phrase hurts me. Since when did investing become a game of wartime courage? Seriously. Holding onto an asset has nothing to do with courage, bravery, manhood or awesomeness.

There are times in life when you have to sell some or all of your assets. It’s not because you’re stupid. You might get divorced, have a baby, need to pay for an emergency health procedure to save your life, or simply want to cash out and buy a home.

You can’t hold an asset forever. Why? Because one day you’re going to die and that asset will hold no value for you anymore. Selling while your still alive is normal. It doesn’t make you weak. It makes you mortal.

Use social media to do due diligence on a company

Stool Presidente on Twitter says, “GameStop looks good today.”
Investor: “Okay.” *Hits buy*

This is a new form of immature due diligence. It scares me. The proper way to invest is by doing the following:

  • Read the financials.
  • Look at the valuation.
  • Study the business plan.
  • Look at a company’s future.

Twitter doesn’t do investment due diligence for you. Remember that.

Cash is trash

[They] be like “fiat is trash” but always have fiat to buy the dip — Dr Parik Patel

Fiat equals cash. Cash buys you assets. Yes, cash goes down in value and can be printed by dudes in suits out of thin air — but…it’s still the main currency we use to transact.

Holding cash can be preparation to buy assets. Cash can be less stress and a good night’s sleep too. I hold plenty of cash to get my sleep.

Investing equals war

Billionaires arguing over assets is childish. Investing based on which side of an asset war you’re on is likely to end badly. See a billionaire example below.

src="https://miro.medium.com/max/1400/1*mIMxkuZN2FqaPax8VREn0Q.png" data-credit="Screenshot via Elon Musk on Twitter"/>
Screenshot via Elon Musk on Twitter

Elon Musk acts like a billionaire troll. Gaslighting has become a mainstream investment technique. The point is to gaslight you enough that you’ll sell the assets you invested in and believe in.

Don’t let gaslighters influence your investment decisions.

Price going down means the end

If I read another article that says “Bitcoin Is Dead” after a standard market correction we’ve seen continuously for the last 12 years, I’m going to vomit. First off, bitcoin is not a currency it’s an asset.

Assets rarely die. Asset prices correct.

Go all-in on an asset

This term “all-in” scares me. No matter how much you love an asset you could be wrong. Certainty in financial markets doesn’t exist. Ask the people that sold their assets during the 2020 stock market crash.

Diversification is the strategy used by the professionals. Your 401K fund doesn’t put all their billions of dollars into a K9 dog coin. Why would a normal person adopt that sort of all-in investment strategy?

Paper hands sell

No. I saw this firsthand when I worked in banking. People have to sell assets when they take on debt to buy them and they dip in price. It’s the reality of leverage. It’s known as a margin call and it protects financial institutions from investors losing everything and not being able to cover their debts.

Investors often sell to cover the debt they took on to invest. One way to avoid margin calls that force you to sell is to invest with cash, not debt. That’s what I do even though the financial gains can be less.

Overconfidence can destroy you.
On the way down your ego starts trading assets.

Prices going down equals RIP

Critics saying “Blah Blah asset is dead” is immature. Forget the “it’s dead” talk. Why do people do it? They’re gaslighting you and they’re often annoyed they missed out on whatever investment opportunity they’re calling dead. Ignore the “it’s dead” critics.

The Federal Reserve won’t let stocks go down

Recessions don’t happen as frequently anymore and they’re much shorter. The reason is that governments around the world use central banks to create money out of thin air. You already knew that.

The problem is it has led the investment community to believe that stocks can’t go down because the government will always step in with free money (stimulus), bailouts, relief packages, infrastructure bills, and rescue plans. This is short-term. Having central banks like the Federal Reserve consistently bail out the economy isn’t a long-term strategy. There are limits.

The problem with creating money out of thin air is we don’t know what the limit is. We’ve only been seriously playing with this experiment since the 2008 global recession.

When is excess free money too much? Nobody knows. It’s safe to say stocks and economies can still go down based on history and economics. Nobody knows how or when, and that’s how it’s supposed to be (by design).

Analyze everyday events based on how they affect the economy

Just found out that there was a minor earthquake in California.
This is a bullish signal because the damage caused to small personal items like plant pots and chimneys needs to be repaired, thus fuelling consumption and boosting aggregate demand for the economy. Long the S&P! — Dr Parik Patel

Access to data has caused us to overanalyze investing decisions. Many people are trying to correlate every event that occurs in the news to how it will affect asset prices. Events can simply happen for unexplained reasons and have zero effect on the economy.

Warren Buffett is being beaten by teenagers on investing apps

One year of wild speculation and a lot of luck is causing some investor communities to think they’re smarter than the experts who do it for a living. Teenagers may be beating Warren Buffett this year. The question is how many teenagers will beat Warren Buffet over a five or ten-year time horizon?

Anyone can look good at investing in the short term.

Capital gains tax is a problem

I’m not worried about Biden’s capital gains tax. My portfolio is down 69% YTD. Guess I’m just built different — Dr Parik Patel

Avoiding capital gains tax is another investment trend. It’s why the U.S. has to regulate newer blockchain-enabled finance products quickly.

If you don’t want to pay tax right away, then you can simply hold onto your assets and borrow money against them to buy stuff.

Tax is how society is built. Paying tax means you made money.

The global reserve currency will soon be a cryptocurrency

I doubt it. The current global reserve currency (the currency most global trade is done in) is the U.S. dollar. Dogecoin isn’t going to be replacing the U.S. dollar anytime soon. Governments aren’t going to let a meme coin run the world. That’s immature thinking.

They probably won’t let bitcoin be the global reserve currency anytime soon either. And if they do give bitcoin that power, it won’t be without a fight. Why? A global currency needs to be easily controlled.

Companies without revenue are worth investing in

There are a lot of investment scams. The ones that really hurt investors are companies and coins that don’t have revenue yet. Revenue is a tick in the “people want this” box.

Companies without revenue are high-risk investments that angel investors with wings, who have money to burn, typically invest in. We call them angels for taking the losses on our behalf.

We’re in a bubble

A bubble suggests an asset’s price is too high. But what if the metrics we use to value an asset are outdated? Tech stocks could be in a bubble. Or tech stock prices could be high as the result of network effects. Therefore, it could be a bubble or it could be a shift in how prices are measured.

Bubble talk is immature. It assumes history sets the future in stone.

Inflation is going to ruin the economy

Maybe. Hyperinflation talk is everywhere and it can be harmful. But inflation is like a paranormal phenomenon. You can see it, sort of. We could avoid hyperinflation from all the money created of thin air by:

  • Refinancing and restructuring global debt
  • Bringing in a debt jubilee (forgiving certain debts)
  • Swapping out old currencies for new currencies (digital, or government-backed, or a mixture)

Hyperinflation is always a potential outcome. But an outcome can be altered with a new approach.

Trading charts tell you a lot

Nope, they tell you the past. The future is unpredictable.

See for evidence: black swan events, recessions, global health events, wars, climate change, etc. Watching traders on Youtube try and tell you where asset prices are heading is immature. Most of them have no clue what they’re doing and are purely providing entertainment in return for likes and followers.

You can quit your job if this investment goes to plan

Seeing investing as a replacement for your job is immature. Sitting at home in your undies trading meme stocks isn’t as fun as it may sound. You’ll get bored. You’ll miss human interaction. And the meaning you get from doing work and seeing it change people’s lives will be lost.

Investing isn’t supposed to replace your job.

A Mature Way to Think About Investing

  • Develop a humble approach to investing: 1) Have an open mind 2) Don’t think you know everything.
  • Most cryptocurrencies will go to zero.
  • Volatility in asset prices isn’t necessarily dangerous. Tech stocks like Amazon, Facebook, and Netflix were highly volatile in their early days, and some tech stocks continue to be. Volatility equals growth.
  • Bitcoin is an asset, not a currency.
  • Don’t stress about prices going down in assets like bitcoin. Time horizon matters. Zooming out solves a lot of investment problems.
  • Invest for the long-term. I don’t buy any asset without expecting to hold it for at least five years.
  • Do your investment homework. Then do more homework when you think you’ve done enough, to make up for overconfidence. I believe in ethereum and bitcoin as good long-term investments. I did years of research and used both products to come to that realization.
  • Expect losses as an investor. In fact, prepare for losses and cap your downside so you don’t end up losing everything.
  • Diversify your investments. Own a basket of assets rather than one or two. Each asset class — stocks, bonds, crypto, real estate, gold — has a financial season where it performs best. When the season changes, diversification supports the shift in weather while you readjust to the climate.
  • Don’t be stupid with crypto. Consider bitcoin and ethereum above others as they have the track record, a large user base, and real-world use cases.
  • Start with 1% crypto. That’s enough for a lot of people. If you lose 1% you won’t blink. If you lose 25% of your money, though, the way you invest may never be the same again. See the subtle difference?

Takeaway: Investing quietly without all the noise can change your life.

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Aussie Blogger with 100M+ views — Writer for CNBC & Business Insider. Inspiring the world through Personal Development and Entrepreneurship www.timdenning.com

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