The Benefit of Missing Out

I first heard of bitcoin in February 2013. After a day of skiing in northern Michigan, my friend told me about how he just bought 250 bitcoins for a total investment of $500. The smartest guy I know, the valedictorian of my high school, was explaining crypto currencies to me. He mine as well have told me that he just befriended an alien. I responded like any good financial advisor talking to a friend over a few beers, “Are you F$&@ing kidding me?”  He was not.

Bitcoin is not the first, nor the last investment that I missed out on. When Facebook hit $18, I was convinced it was going to $0. It’s currently trading at $175 per share. I’ve been waiting for a dip in Amazon stock for the past 9 years. No way would I buy Netflix stock, have you seen its P/E multiple? Netflix is up 430% over the past 5 years.  Two months ago, one of my best friends told me about a bioscience penny stock company making health food out of algae.  I told him he was crazy.  He’s doubled his money.  

As a financial advisor, I’m asked for stock tips constantly from my friends.  Almost always I tell them about large, boring companies with healthy dividends.  Ultimately, they are disappointed when I suggest Apple may be a good investment.  They would prefer to hear about the small Chinese tech company that is making the newest AI technology.  You know, the type of company that I can invest $1,000 today and be worth $1 million in a year.  Or, how about the newest Cryptocurrency.  Have you heard of LiteCoin?  (Or maybe it is LightCoin, I have no idea)  Sorry, that’s not me.  

Sure, my investment in Home Depot and Apple have doubled in the past 3 years.  I’ve also done well with Marathon Petroleum and have even made over 50% on a sexy little utility that I bought two years ago.  What, you can’t get excited about Consolidated Edison?  Still, none of these investments have made me rich.  None of them will make me rich tomorrow, or in the next year.  The goal?  Someday these investments will make me rich. Or, more likely, at least help me save enough money to have a comfortable retirement when I turn 65.  

Ultimately, this means that I “miss out”.  I miss out on investing in the next Google, Facebook, or Celgene.  It also means that I miss out on having those worthless bankrupt stocks sit in my account for years.  I miss out on the next Enron.  I miss out in giving my friends that penny stock idea that will someday turn them into millionaires.  I also miss out on having to explain why their $1,000 investment has turned into $0.  I’m ok missing out on the next “big” thing.  I’m not ok missing out on a comfortable financial future.   If that means boring, slower growth, high dividend paying stocks.  So be it.  

Where did I get this boring investment strategy?  From the craps table.  The first time in Vegas I somehow turned $20 into $800 on the craps table.  I had never played before, but it looked fun and a good way to blow a few bucks before going out to dinner.  I never made it to dinner.  I remember leaving Vegas thinking playing craps sure is easy.  It isn’t easy.  Unfortunately, I have spent more than $800 since that day finding out just how hard it is. Playing craps isn’t much different than investing in penny stocks, or crypto currencies.  What happens if I would have struck it rich with Bitcoin?  Pretty good chance that I would have chased “lottery ticket” after “lottery ticket” to try to replicate what I did with Bitcoin.  Really good chance I would have blown it anyway.  I know myself.  I missed out on bitcoin, but at the end of the day, I’m better off for it.

I saw my bitcoin buddy again this weekend.  He reminded me that I “missed out” on $2.5 million by not buying Bitcoin when he told me about it.  The truth is that I didn’t miss out on anything.  There would not be a chance in hell that I would have still owned my bitcoin.  I would have sold it at $100 and been happy cashing in my profits.  Or I would have sold it at $1,000 if I had somehow slipped into a deep coma and woke up 3 years after buying the coins.  Or I would have lost all my money anyway when the exchange I was going to buy them on, Mt. Gox, got hacked and lost all off of their coins.  Yes, maybe I did miss out on a little extra money if I would have bought bitcoin when my buddy told me about it.  If missing out on these type of investments means that I end up having more later, I’m just fine missing out.  

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