Edition #5: Shiny Stock Syndrome, Goal Post, Blue Chip, Costco, Outsmarting the Crowd

Image for post
Image for post

The stock market went crazy in 2020 after March’s coronavirus dip — and it’s still remaining high. This makes it especially tempting for investors to jump on the next hot stock.

Having experienced this myself, I call this Shiny Stock Syndrome, and write about a counterintuitive (at least to me) way to deal.

shiny-stock-syndrome-investing-mental-model

Our attention is limited we can only pay attention to so many stocks at one time. Buying new stocks with little research is closer to gambling than investing.

Read Shiny Sock Syndrome here.

The key takeaway is to be as into your current stocks (or investments, or assets…) as you are new ones.

For me, the sobering “self-check” is to ask myself: “Do I find this new investment so compelling that I’m willing to trade my current investment for it?”

Evaluating new investments in relation to my current investments, while it sounds obvious, is going right into my list of investor heuristics.

Many people set out to become millionaires. Some achieve it. Once they reach that goal, you can bet their next goal is $2 million, or $5 million…

What starts out as a trickle of desire can turn into a stream.

To reach contentment in life, at some point we have to stop moving the goal post.

This isn’t an excuse to not work hard or give up ambition.

If you’re working on New Year’s Resolutions right now, consider Productive Subtraction:

  • Make new friends > deepen existing friendships.
  • Make more content on social media > eliminate one social feed from my life
  • What do I want? > What do I want to give up?

I hear “blue chip” stocks uttered all the time in investing, and all this time…I thought it referred to S&P 500 tech companies. I was thinking of a computer chip.

Turns out, the definition is way broader than I had expected:

A blue chip is a nationally recognized, well-established, and financially sound company. Blue chips generally sell high-quality, widely accepted products and services. Blue-chip companies are known to weather downturns and operate profitably in the face of adverse economic conditions, which helps to contribute to their long record of stable and reliable growth.

Investopedia Article

In poker, blue chips are typically higher than red and white chips, but lower than green or black chips.

Image for post
Image source: the Spruce

In a similar way, blue chip stocks refers to relatively stable stocks that conservative investors prefer.

If you want to shop at Costco, but don’t want to pay the Costco membership fee…

You may be able to buy a gift card from Costco, then redeem it without paying the membership fee.

Your mileage may vary, but it appears the most reliable way is to ask a friend from Costco to buy you Costco shop card. Or, you can always shop at Costco.com online but pay an extra 5% fee.

If you’re looking to load up on 12,000 sheets of toilet paper or 240 servings of Mac & Cheese, here’s a resource on 6 ways to shop at Costco without a membership.

In line with this week’s post about not chasing shiny objects, here are 2 quotes from the book Outsmarting the Crowd.

Missing an opportunity on the stock market to missing a train: another one is sure to come!

Great reminder to steel ourselves against financial FOMO. And another helpful reminder:

Discipline also means not gambling with money you might need. Fear, which can drive people to make irrational choices, is the investor’s worst enemy.

If you’re enjoying the newsletter, I’d love it if you shared it with a friend. You can send them here to sign up. I try to make it a bright spot in your inbox each week, and hope you’re enjoying it.

Should you find anything interesting this week, slide into my DMs. I love finding new things to read through my online community. If you have any questions, hit me up on the Ask Me Anything page. I’ll give you a hilarious answer.

Until next time,
Oz

I’m just a guy on the internet with an opinion, so please just treat my content as entertainment. My content is may contain referral links to products I use or love. My content is for informational purposes only, and you should not construe any such information or other material as legal, tax, investment, financial, or other advice.

Writing about personal finance OzChen.com and UX Design on UXBeginner.com

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store