Investing Meetup Report (Part 2)

Today I continue reviewing a Meetup I attended earlier this week.

Three of the six attendees were totally new to investing. From speaking to many beginners over the years, they are often in search of “holy grail” type knowledge. As I compliment them for taking the time, they feel they are gaining edge over others who make no effort to learn. They seem motivated to soak up everything they hear and they seem to believe anyone who seems credible or authoritative.

Aside from the Organizers, Mr. Know It All seemed most credible the other night! He spoke dogmatically and two of the newbies were quite taken by his words.

Since Mr. Know It All mentioned that he trades futures, I went over to him afterward. I eventually interrupted his monologue and asked point-blank whether he makes money. He responded negatively. He said he’s retired, he does this “just as a hobby,” and he expects to lose.

This gambler’s mentality is not uncommon. Many people go to Vegas with hopes of striking it rich while expecting to lose. I hope most have a reasonable limit in mind of how much they will lose before they quit. Whether responsible or not with this limit, for someone like me who trades for a living this gambler’s mentality is appalling.

The problem I have with Mr. Know It All spouting “knowledge” to beginners is that he loses money. He clearly likes to talk and he enjoys when others listen but why should they: so they can lose money too? Unfortunately, I think people are often so ignorant about financial literacy that even if told someone loses money they will listen anyway. At the very least, beginners may figure he’s further along the path to wealth than they are so they might as well grab onto his coattails.

We really don’t know if Mr. Know It All is on the rainbow walking toward the pot of gold or whether he is caught in a vicious cycle with a mistaken belief that every subsequent loss teaches him something critically new. As an irresponsible gambler, he may be prepared to lose all his money until he starts to see gains and no beginner should ever be exposed to toxicity like this.