GameStop or Game Over: Don’t Chase Market Exuberance
Some girlfriends of mine think the stock market is just gambling. Yes, stocks are risky, there is a chance if you invest in an individual stock, you could lose your money. Look how Game Stop plunged!
Many people compare the stock market to a casino but in a casino, the odds are stacked against you. The longer you play in a casino, the greater the odds you’ll walk away a loser because the house wins based on pure probability. It’s just the opposite in the stock market. It is a bet that the future will be better than it is today.
Investing allows us to invest in human ingenuity. If you don’t want to go through the pain of starting your own business, buying shares in companies is the simplest way to own a slice of a business. You get to ride the coattails of intelligent people and businesses as they continue to innovate and grow.
What GameStop has taught us is that many pension funds that invest in high fee long-short hedge funds will think twice before investing in that strategy. The crowd can squeeze you out on the short side at any time, therefore, destroying teachers' pensions they need for retirement.
Investing in index funds has turned much of the investing public to be the 'smart' money while the investing professionals have underperformed for years.