The world of investing can be thrilling and rewarding, but it can also be risky and full of traps. Carl Richards, from The Behavior Gap, comically says that one such trap is the Pretend Investor Disease (PID), a dangerous affliction that can wreak havoc on your savings and investments. At Victus Group, we strive to help you navigate the complexities of the financial world and avoid the pitfalls that can harm your financial well-being – but we also aim to keep our conversations authentic and light-hearted. So… let’s chat about PID.
PID is a deceptive and contagious ailment that convinces unsuspecting investors to buy an investment at an inflated price, with the sole expectation that the price will continue to rise. The intention is to sell the investment to someone else at an even higher price, which is not a sustainable investment strategy.
This perilous behaviour, known as The Greater Fool Theory (thanks, Carl!), relies on the assumption that there will always be someone more foolish who will buy the investment at an unreasonable price. Recognising that this approach is unsustainable and can lead to substantial financial losses is crucial.
The contagious nature of PID exposes investors to hazardous elements like insider tips, hot stocks, and misleading hashtags, which only fuel the disease. If you find yourself thinking, “I’m going to buy this and hope it keeps going up,” you might already be under the influence of PID.
To protect yourself from the damaging effects of PID, follow these steps:
- Stop what you are doing immediately.
- Do not buy the stock based on mere hope.
- Seek help from a trained professional, such as a financial advisor at Victus Group.
The most effective way to combat PID is by developing a robust investment plan, grounded in your values and goals, and sticking to it even when others around you engage in foolish behaviours. A sound investment strategy is built on research, analysis, and a clear understanding of the risks involved, rather than on hope and speculation.
It is worth noting that PID has affected investors worldwide, and you may even encounter asymptomatic carriers who have profited from hope-based investing due to sheer luck. However, for every lucky individual, countless others have suffered financial ruin because of PID.
At Victus Group, we believe in empowering our clients with the knowledge and tools needed to make informed decisions and protect themselves from harmful financial practices. By adhering to a well-thought-out investment plan and seeking guidance from our team of experts, you can avoid the pitfalls of Pretend Investor Disease and work towards achieving your financial goals.
Stay safe, be vigilant, and remember that hope is not an investment strategy. Let the team at Victus Group help you navigate the complexities of the financial world and build a secure and prosperous future.