Heads-up: this post is for investors and especially those who have gone deep into the world of NBA basketball. We draw parallels and metaphors from sports to markets and back again. I hope you enjoy it.
I wasn’t old enough to be trading during the DotCom Bubble.
At that time, the only thing I really wanted to read about was Steve Francis vs. John Stockton. In my mind, that was the greatest point guard rivalry I had seen. Stockton was undersized, and couldn’t jump over a barrel of hay. He was also a veteran, a sage, someone who had seen some things man. Francis was the fastest point guard in town. But, sometimes, his passes landed among the crowd and in their seats. He was young and wanted to be a human highlight reel above everything.
Slow and clever vs. fast and careless.
I often find myself thinking through parallels in sport and in markets. That alone sounds like conversation for Bill Simmons and Jim Cramer. But the parallels are there. There are plenty of lessons for both disciplines. If you hoop and follow markets, I am sure with enough thought you can find overlapping tactics to help you with both.
We’re currently witnessing one of the greatest bull markets ever. It is magical! It’s a diaper dandy bull market baby! I keep hearing people joke about this trope going around the street. This idea that, “The Easy Money Has Been Made.” This headline has been passed around for years. Go ahead and Google it. Or search Twitter for it. You’ll find a range of investors tweeting those exact words.
There is no easy.
Recently my thoughts toward this trope have changed. Mostly because of a realization… There’s never been any easy money! And there still isn’t any easy money. The market’s rise over these last eight years has been like John Stockton – slow and clever.
I’ve been studying the DotCom Bubble. I find I myself looking at the way stocks were spiking back then or hearing stories from people who saw it firsthand. It’s nothing like what we see now. At least not yet. You are right to ask about the massive spike in Bitcoin and cryptocurrencies. But you’re wrong to think it was easy money. Only a few people walked away with serious winnings from that. Most people I know were burned by cryptos. Blocked like Dikembe Mutombo!
This rising bull market is smart. It’s clever. It’s exposing mania worse than some of the biggest ankle breakers in today’s NBA. It fakes you up, way up, just to break you back down.
After Bitcoin, there was weed. The high all easy money investors and traders are waiting for! It is not. When a stock goes to $100 to $300 and back to $100 in two weeks or less, that’s not easy money. That’s unheard of speed and volatility. That’s people getting hosed chasing dreams only to get wiped out by a select few who can hit sell faster than you can check your margin balance.
There’s a mystique in the air of markets.
In the stadium, onlookers think money is flowing like water. Wide open shots for everyone! The market keeps hitting all-time highs! But this is a calculated and rotational rise among the strongest stocks. Some of which most people have never heard of. Others of which everyone uses on a daily basis. But meanwhile most of the general public have been too scared to go near them. They ask, “can we buy Apple when it’s above $1 trillion?” That is indeed a difficult question and the psychology of feeling like you’re last to the party is nerve wrecking.
In this market, if you chase a stock, you will get posterized like a young Vince Carter.
If you bought emerging markets, you’re now in the middle of a trade war and trying to contain its damage like raining 3s from the Warriors.
If you think finding beaten down blue chips and taking a chance on them is your key to getting the next big comeback, *cough* GE *cough*, you’re getting harassed by a Gary Payton level of defense. Maybe worse! Who’s a better defender? That’s who’s guarding you if you’re going after those buckets.
The greatest show on Earth is live Monday through Friday. It’s the biggest bull market in history. Sit back and enjoy. Check your portfolio. Make sure your risk is spread out. But most importantly, realize the difference between something that’s slow but clever vs. fast but careless. You’re not going to make fast money or easy money when playing against someone who is slow but calculated. They will expose your carelessness.
The current market is slow but clever. If you treat it like it’s fast and careless, you will get burned.
Thanks for reading.