In the Bible a conflicted Pontius Pilate posed the question, “What is Truth?” Those three words sum up much of the human experience. The year 2020 will be remembered as an often-heated battle to find truth. The virus response, racial tension and numerous areas of political debate deeply divided our nation. With each declaring the “truth” by which they claimed the higher ground, the contests were often intense. States argued with states, cities opposed neighboring cities and family and friend relationships were sometimes strained to the breaking point over the search for, or denial of, truth.
Two-thousand years after Pilate’s question, the internet with its unlimited resources should have finally provided the answer. But sadly, this avalanche of knowledge seems to have made truth even more elusive.
Take the recent GameStop (GME) fiasco. On one side, a group of mostly millennial investors connected in real time through social media joined together like a digital army to take on some of the most powerful financial organizations in the world. Rallying the troops using internet forums that gave them instant access to millions of like-minded individuals, they rapidly gained the upper hand as they drove the price of their favored GME stock to astronomical heights. The rapid attack caused significant financial casualties to their hedge fund foes. It seemed the battle would be swift and decisive. I communicated frequently with millennial warriors who believed their victory would reward them with what they excitedly described as “stupid” levels of wealth.
But then, as quickly as it began the enemy struck back, taking the weapon that had been used against them and turning it on the millennial army. Infiltrating the same internet forums that had been used to launch the attack, they spread their own version of “truth” in an attempt to weaken the resolve of their opponents. The public conversation became so confusing that it was impossible to distinguish truth from error. The hedge funds knew if they could get the GME fanbase to begin asking, “What is truth?” their ability to continue the attack would be thwarted.
This experience should be a reminder to all investors of the value in finding truth and sticking by it, if they are to be successful. And where is truth to be found? Many internet sites are driven by anonymous contributors, as in the now famous Reddit® forums, but when people are anonymous there is no way of knowing whether they are reliable or not. It is the same lesson 2020 tried to teach those who seek political truth in social media posts from anonymous or questionable sources.
Using the GME debacle as a guide, may I offer some guidelines for finding that elusive investing truth. 1 – Reject anonymous sources. 2 – Seek your own knowledge rather than trusting that which is pushed upon you. 3 – Avoid making decisions when you feel your emotions rising. 4 – Run from greed. 5 – Trust what you know to be right, not what is currently popular. 6 – Invest long term, ignoring the daily side-shows.
Wyson Financial | Wealth Management in Southern Utah
Financial Planning and Investments
