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I recently requested prospectuses and other sales material from a national brokerage firm for investments held in the account of a new client transitioning to TAAG and was told they no longer had the information because the materials had ‘expired from our view.’

I knew Snapchat had infiltrated our social interactions, but I didn’t realize the idea of ‘now you see it, now you don’t’ had taken over investing practices too.  But then I realized it absolutely had.

The idea of getting rich quick has always been appealing, but the belief that you can get rich by quickly moving from one stock to the next, or by trading in-and-out of a stock was heavily promoted over the last few years.

During the lockdowns and work-from-home environment of Covid, people gambled on FanDuel and DraftKings to pass the time, then moved on to trading meme stocks and crypto on Robinhood.  Trading in GameStop to punish short sellers became entertainment, while Covid-popular stocks like Zoom saw their stock prices climb to levels that made their market capitalization greater than decades old, asset-rich companies like Exxon.  Back in March, Chip blogged about his own experiment trading on Robinhood here.

Trading in a select few companies may be profitable, but it comes with its own set of problems.  If you’re holding a stock that’s up significantly, do you take your gain or hold on hoping it climbs higher – at the risk of losing it all?  And what do you do if you’re significantly down?  Do you cut your losses and begin again?  Moving on to a new stock starts the risk cycle all over again.

Sitting in front of a client as a fiduciary financial advisor, we won’t tell someone that buying a hedge fund will double their money or a stock is a sure thing, and we certainly won’t tell them that the information we provided to them about our earlier investment recommendations have ‘expired from our view.’

Jeff Bezos, the founder and former president and CEO of Amazon once discussed investing with Warren Buffet, the legendary value investor and majority owner of Berkshire Hathaway and asked, “Warren, your investment thesis is so simple, and yet so brilliant.  Why doesn’t everyone just copy you?”

Buffett’s response, without hesitation: “Because nobody wants to get rich slow.”

Getting rich with a disciplined, diversified investment plan is boring.  It doesn’t go viral or inspire news stories.  Having an investment discipline does work, and it allows wealth to endure. But in this Snapchat-attention-span-world it’s sometimes tough to convince folks who have been indoctrinated to think otherwise.

The month of July saw a significant recovery in US stock prices, with the S&P 500 up 9.2%, so if you held a broadly diversified large cap stock portfolio or index fund you should have participated in a significant one-month gain.  But if you held only Intel and P&G, you would have experienced a drop of 9% and 6%, respectively, on the last day of July alone.  One day isn’t a long-term investment period, but it illustrates how volatile returns can be if you concentrate your holdings.

Investors who were lured into the practice of rapid-trading and portfolio concentration may be paying attention and changing their habits, however.

Last week Robinhood announced it is laying off 23% of its fulltime staff workers after already reducing its workforce by 9% in April.  To quote Vlad Tenev, Robinhood’s CEO, “Last year we staffed our operations under the assumption that the heightened retail engagement we had been seeing with the stock and crypto markets in the Covid era would persist into 2022.  In this new environment we are operating with more staffing than appropriate.”  One of the stocks traded in last year’s ‘heightened retail engagement,’ SNAP – the parent company of Snapchat, is down over 77% YTD as I write this blog.

Getting rich slow is looking better and better.