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Dear Reader,
In one of my favorite commercials from 1999, Stuart, the office cyber-geek, helps his boss make his first online stock purchase.
Stuart's famous words were: "Let's light this candle!"
When the boss, Mr. P., protests that he doesn't know anything about the stock, Stuart suggests to "research it."
Mr. P. then strikes a few buttons on his keyboard and a few seconds later, suddenly wiser, proceeds to buy his first hundred shares of Kmart.
Like many online brokerage commercials back then, Mr. P. demonstrated how easy it was to buy stocks via the internet.
He also showed the world how easy it was to feel smart in a bull market.
One year later, of course, the commercials were a bit different.
When a little boy asked his father what he was doing at the computer, the father said he was investing for his college education. Looking over his dad's shoulder, the boy was curious about the on-screen data.
"Five-year earnings, p/e ratios, earnings per shares..." the father cites.
"A p/e ratio of 23," the son asks, "Is that good?"
The father's dumbfounded silence clearly reflected his sudden realization that he knew less than he had thought.
In 2000, the year of the Dot-com Crash, millions of investors quickly realized that they didn't know much, and that a lot of what they had been sure of was wrong.
Take Mr. P. as a prime example. Sure, it was an advertisement, but only a few people back then would have guessed Kmart's collapse just two years later.
Now, here we are 21 years later and I'm beginning to think I'm in some sort of a time loop. The gut-wrenching feelings I had in 1999 are beginning to creep back up.
Perhaps the little boy is all grown up now and, like father like son, is making mindless investments for his children.
Perhaps Reddit's WallStreetBets is the new version of 1999 AOL chat boards.
Or perhaps, it's because I see Robinhood running eerily similar marketing pitches from the years past. It's so easy to become an investor these days because hey, "you were born as one."
Whatever the case is, in 2021, one thing is clear:
The speculative nature of common stock investing is through the roof.
It's why I'm telling everyone to stock up the shelves and board up the windows – right here, right now.
With all the hysteria going on in today's "bull market," a plan for protection is more important now than ever before.
It's a little strategy called hedging – one that will save you from the inevitable storm brewing in the distance.
Click here to learn more.
Best,
Tim
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