Trend to Embrace – or Stupid Herd Mentality?

I just started watching the Madoff Netflix series and it stimulated thoughts about how people (and I) make “investment” decisions.

FoMO (Fear of Missing Out) creates an amazingly strong intersection with greed, and I learned that when I entered the crypto “investing” world near the top with a modest investment and lost a few thousand while gaining the feeling of being an idiot.  

I find it’s hard to discern the difference between herd mentality and the legitimate future – as it’s happening. It can feel impossible to know when I am stuck in underinformed old-school thinking vs. not recognizing a new world order – a new trend as the real future.  Lots of people saw the tech explosion in the 80’s and thought tech valuations were crazy.  They eschewed tech investments as “ridiculous” and continued to invest in businesses they already understood, missing the meteoric rise of tech via Apple, Amazon, Google.  I succumbed to herd mentality when I bought a little Bitcoin at $60,000.  Now it’s at $21,000.  Me: herd mentality loser.  The 18-year-old who bought $500 of Bitcoin at fifty cents, retired.  I still don’t know if the 18-year-old is smarter than me, or just got lucky that what he guessed to be the future turned out to be so.

For the Stubbornly Young, let’s understand what these new waves are.  Read enough and get a sense of new trends to feel you understand, even if you don’t buy in. 

I don’t want to dwell on my Bitcoin mistake so let’s use another current example: non-fungible tokens (NFTs – here’s a good article about them).  I was and remain fascinated by NFTs, and I think they are nuts even though some people have made money on them.  Here’s my understanding of what an NFT is: a purchased right to say that only you have the right to say you own something everyone else can see, watch or listen to for free.  Ridiculous.  But I understand the concept and am genuinely curious about it – and that gives me the right to enter a conversation with my sons about this and offer the opinion that NFTs are crazy. 

With some hindsight, I’m still uncertain about what role, if any, a widely accepted digital currency might play in our future. Buy or don’t buy Bitcoin – I have no idea.