James was having his “look in the mirror” moment.
Confronting the great truth about investing.
“The investor’s chief problem – even his worst enemy – is likely to be himself.”
And he was distraught.
He bought Oxford Nanopore Technologies shares in December 2021. At the height of Covid frenzied news.
Biotech shares were an emerging bubble getting a lot of noise. Some of his friends were part of an online investor forum and had bought in themselves.
They had talked about it incessantly:
“You can’t lose…..this will be big…..if you had bought Apple shares when they first started, you’d be a trillionaire.”
James succumbed and went big.
When the shares listed on the London Stock Exchange they rocketed up 33% in the first few weeks.
He became addicted, watching the share price bubble along, soaking up the hype, and chatting with his friends.
He went back in and bought more.
And then the correction came. As it always does, and James’s investment more than halved.
Early-stage investment is always risky. Ninety per cent of start-ups fail, and that never makes the news. It’s the siren call of the huge pay-off that sucks people in.
It’s your brain’s fault.
It’s not surprising.
Humans are all prone to unconscious biases that cloud our thinking. Biases that have evolved over millennia as mental shortcuts.
It’s why I have my own financial advisor.
The drive to social conformity – fitting in and playing with friends – is huge. After all, throughout history our survival depended on social acceptance.
It’s why exile was akin to a death sentence.
The Covid world was filled with news about medical science, vaccines, and treatments.
It “confirmed”the smart decision to invest in a biotech company. One that specialised in DNA sequencing, genetics research and diagnostics.
The confirmation bias was reinforced by his friendship group.
There was nothing I could do for James. It was a painful and embarrassing lesson. His wife was not happy.
Beware of you
“Why didn’t you call me? I am your financial advisor. It’s what I am here for, to act as a sounding board.”
We all make mistakes, but as you enter your 50s there is too much at stake. It’s your future retirement happiness on the line.
Research shows that an advisor can add up to 3% to the value of your investments after all costs.
One of the biggest areas is stopping you from making mistakes.
If you have an investment question, or are just concerned about your financial future, just call me on 02 4926 7100 or click here to schedule an appointment.
A half-hour chat could save you a lot.
And that offer is open even if you are not a client.