Greater and Lesser Fools

Grizzled investors will tell you that if you feel euphoric after a trade, it wasn’t a good one. You should feel awful and be second-guessing yourself. That’s the sign of a great trade.”

–Andy Kessler, “A Stock-Trading Dupe is Born Every Minute”; The Wall Street Journal (2/21/2021). 

Admittedly, three weeks does seem a little hasty for the definitive postmortem on the whole “GameStop/Reddit/WallStreet Bets” stock-trading bubble (and predictably, now very-much bust).

But, I don’t think you’ll find a better take (takedown?) than Andy Kessler’s piece in today’s Wall Street Journal (of course, it’s also the case that three weeks in real life (“IRL”) can be a veritable epoch online — Quick! how long has it been since Donald Trump left office?).

Pump-and-Dump, Updated

According to Kessler, GameStop was a classic “pump-and-dump” scheme, updated for today’s nanosecond trading and Internet chat boards.

As always, the victims (“marks,” “dupes,” “fools” — your choice) are the ones who got sucked in as the stock moved ever-higher, then were left holding the bag once the smart money had safely departed (and profited).

P.S.: Kessler also puts his finger on why I find trading (vs. buy-and-hold indexing) so fraught and otherwise unappealing.

That’s because great trades are always indigestion-inducing.

Applying Kessler’s maxim (which I know to be true), the better trader you are, presumably the more indigestion you have . . .

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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