They say that seeing your stocks go up gives you the same feeling, the same brain activation, that a gambling or drug addict experiences. That’s some pretty dark sh*t, but I’m just trying to tell it like it is. When markets are soaring, speculation is rampant, and money is flowing, yes that is great for the moment, the initial rush, the few who capitalize on it, but long-term, I’m not so sure about its benefits.

I’ve seen my fair share of market calamity and I still have a lot to learn. One thing in particular remains true: each time I think I’ve seen it all, each time I think it’s as crazy as it’s ever been, markets always find a way to get crazier. A great investment writer once said “markets are crazy, and then they get crazier.”

As of this writing, a company called Nikola, with no earnings and no actual product, just hit a market cap of $30 billion. It’s worth more than Twitter, Twilio, Docusign, Hormel, Kellogg, Tyson, and the list goes on. The founder of Barstool Sports was just yelling on live video that Buffett is an “idiot” for selling some stocks in his portfolio.

A large number of first-time traders and investors are going after ol Buffett. What these people forget, is that Buffett made investing popular in the first place. Markets would be nowhere near what they are today if it weren’t for him. To think you know better than someone like that is like LaBradford Smith trying to take down Michael Jordan in his prime. Exactly, you don’t even know who LaBradford Smith is.

The other day, I was reading Buffett’s annual shareholder letter, the one he wrote after the Dot Com Bubble. One segment got my attention:

“Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities, that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future and will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands.” – Warren Buffett

Back in 1999, when the Dot Com Bubble was hitting absolute mania, markets were soaring, and everyone was making money in high flying tech stocks. But Buffett actually missed out on the entire rally… and he missed out on purpose. He wanted no part of the speculation that had detached price from actual business value and productivity. He has his rules and he sticks by them. Here’s what he wrote as the market was about to come tumbling down:

“But a pin lies in wait for every bubble. And when the two eventually meet, a new wave of investors learn some very old lessons: First, many in Wall Street, a community in which quality control is not prized, will sell investors anything they will buy. Second, speculation is most dangerous when it looks easiest.” – Warren Buffett

I have no idea if Buffett will be right again, and I don’t care, I have my own portfolio to tend to. I do know, though, that his patience and risk management extends far beyond the average investor or trader. And I would rather have patience and risk management over the long-term than a short-term euphoric moment.