Narrative Traps: Hopium.

Lessons, Missteps, and the Endless Pursuit of Knowledge

Aug 09, 2023

Dive into a candid stream of my consciousness—unfiltered & unrefined warning.

Don’t chase narratives. You have to be on the stocks before they become the narrative. Buy low and sell high is the strategy. I have held a few losers to zero. Yes, it is easy to be smartass in hindsight. Why did you not sell, or why did you not short/hedge your position and lock in the gains?

I had no exit plan, “hold forever”.
I had no plan.
Greed
Stuck in lottery winner syndrome, this thing will conquer the world, and I can live with just passive income. I hope it will grow and everything will be okay again…
I was not doing any research, hoping things would somehow end up fine.

Hope is a shit strategy.

I have also made exits too fast and succumbed to the opposite narrative, eg I had huge bags of Tesla, but everybody was screaming that Elon had lost his mind and Tesla would go bankrupt. So I sold.

Again, I did not have any plans.
I did not truly understand the company and its future outlook.

Understand what you own.

If you want ten baggers, you want disruptive stocks. Stuff that makes competition irrelevant or look stupid. It is also extremely hard to hold/sell these. You must build tremendous conviction, meaning hundreds of hours of research, studying, and following the industry and companies. It is hard to buy assets that the majority hates.

Markets humble us all.

Infinite call options - 99% too good to be true.

I like to find assets that are EV+++. Simply just “good” does not cut it. Bitcoin is still in its infancy. I know 99% still hate Bitcoin but think it this way. It currently has a 3% of Gold’s market cap of 13 trillion. Global real estate is 300 trillion.

Bitcoin has the potential to capture a significant portion of traditional store-of-value markets.

If you think it has even 1/100 change, you bet this fucker. Bitcoin is not a scam. The biggest scam is everything else.

Bitcoin is also unique because it can have multiple narratives. The same goes also against Bitcoin. It is easy to buy and HODL! Sells instantly when some shit exchange collapses. I have no clue what will happen to Bitcoin price in the short term - maybe a little bit down, just based on the cockiness of Bitcoiners. I see again all kinds of hopium it shoots to one million, and bets how it will go to 100k minimum next year. Long term outlook looks good.

Uranium - Those are the other crazies. “This time, it is a different story” What if the world came to sense and go completely Nuclear and some Gen 4 reactors revolutionize how people think about nuclear? Have you heard of new uranium mines recently? Who even wants to open one? Trouble at Niger at the moment? What if these lunatics are right for once?

Palantir - “The Messi of A.I” This is also a weird one. I don’t understand much still about their stuff, even though I have followed them since the IPO. They have massive amounts of “fans” and a vast retail following. The CEO said in the latest earnings call that “investors” are calling customers… Now might be an excellent opportunity to lighten those bags if you snagged these at 5-7$ since Reddit is full of screenshots of gains and big buy orders… What if it is the Messi of A.I? There is no need for FOMO or worry it won’t go to a trillion in a few months… Although already +200% YTD, yeah, weird times. At least they make a little bit of money today. Interesting company.

We got the amazing crypto bull run 2020 - 2022, celebrities buying NFT’s and everybody shilling weird tokens, and now A.I mania is still ongoing since early 2023…

These are just examples of recent narratives. Hear your colleague talk about something similar. Some random Twitter thread you stumbled upon or an interesting Reddit post you read? If you go and then buy the asset based on just this, you will get wrecked. We have sort of “gamification” where everybody chases all kinds of narratives/conspiracy theories/half-truths or whatever. Everybody is getting more and more addicted. It is also weird that we have these super fans of certain stocks. It is ok to like some company, but when you devote your life to just one stock or asset…

This also creates enormous opportunities, do “investors” even do research nowadays. Arm yourself with knowledge and exploit this “craziness.”

Finnish stock market darlings - Chasing hype

Many small Finnish private investors chased narratives, succumbed to the hype, and threw the towel in too fast. I know little about these companies. These pop into my feed constantly since Finnish people are excited about them. They aren’t “value stocks”, but driven heavily by dreams and narratives that they keep growing fast. It is tough to get the snowball rolling again when the growth stops. How can management turn it again back to growth?

Revenio Group

Revenio Group is a Finnish health tech company specializing in the design, development, and commercialization of tonometers, devices used to measure intraocular pressure, a primary risk factor for glaucoma. With a global presence, the company plays a pivotal role in eye health, aiming to combat vision loss and improve the quality of diagnostics and care.

Many bought the way up and then sold. We are humans, after all. Or were you expecting these tonometers etc. have exponential growth forever? If your thesis was that demand for these will grow in the future and this is a multidecade play, then you buy more of the stock? Have a plan. Why did you buy the stock? When to buy? When to sell? Revenio gave a profit warning, hence the dip. Results will come out on 10.8.2023. Currently, the stock is back to the 2019 levels. Opportunity?

QT GROUP

Qt Group Plc engages in the development of software tools. It specializes in development, productization, and licensing of software development tools based on Qt technology under commercial and open-source licenses.

Everybody loved the stock at 170€ but not so good at 60€? If you truly understand what you own, you should be delighted at 60€. Indeed you bought the dip at 35€? Insiders have been selling last 6months, nothing big, but still.

Both of these companies are beautiful companies and have already had massive successes and growth. They already went from small companies → Listed companies → Heavyweights in Finland → Can they conquer the world?

Like these companies, Saku Koivu was an excellent player, captain, and fighter. Still, the valuation of these particular companies suggests that magically next season, we would have McDavid in our team. How many times have we seen something like that happen? Again I don’t know anything about these companies. The charts tell the story.

QT group just suddenly makes Google look like an idiot. Everybody must have tonometers at home. Go figure. You cut losers out and let winners run. It is fucking hard. In the long run, making money is hard for companies, individuals, and investors. Do your homework, study everything about their competition, products, etc, and it is fucking hard. Does your thesis still hold after the results? Have outlooks changed? When to buy? When to sell? I will get more interested if my feed contains stories that the growth story for these has ended, and they are done.

I want to buy my stocks at a reasonable price. Again I have done just a small amount of research, but I will follow Revenio a little more.

+ Almost at 52week low

+ Very healthy company, with small liabilities

+ Good products and moat?

+ Awesome past growth +20% and good margins

+ Megatrend is there. More people are getting older, and more healthcare investments are needed. Are these products needed?

+ Might be a good candidate for a buyout? Not always good (Okmetic), but it adds to the margin of safety.

- Was the growth driven just by this covid madness? Now they expect 1-5% growth.

- Still too expensive for me.

Buy low, sell high - DYOR

Can you stomach the volatility? Bough the hype and then sold when things did not look so pretty?

Resist impulses.

You could have bought Meta at 12 P/E November 2022, +200%, Bitcoin at 15k, and Tesla at 100. Embrace the volatility if you understand these assets. These have been bizarre times since covid, and we are in the biggest bear market rally ever? I don’t know what will happen to interest rates or will we have a recession — sitting here and guessing. We have too much debt. If I owned “stock” of the U.S or Finnish government, I would not sleep at night. The same can be said for a big punch of companies and industries…

source: @ecommerceshares Good account go follow.

These are just casual moves here. NVIDIA just shooted to a trillion, and it’s “total normal”. There are over 60k stocks listed, plenty of opportunities out there, and there will also be in the future.

Will the concentration of the markets continue? Can it concentrate even more? Value investing is dead?

These are lovely times to learn more, follow the markets, find exciting companies, and add them to your watchlist. Congratulations if you survived this far and are still on your long-term plan. Many have given up, and the majority have had to give up since the rising interest rates and squeeze in purchasing power.

You also get +5% doing nothing now.

My tips to fight emotions.

What helped me to resist emotions - I am still human, and I FOMO too and make stupid moves still. The aim is to get better. I have made so many mistakes during this journey. It is ok. Look at big institutions; they FOMO too and make huge mistakes, still run by people.

Simple plan. Buy low, sell high. Grow asset portfolio.
Stoicm - And all kinds of negative/positive visualization practices
Do you check the prices of your portfolio constantly? Why? If I wonder middle of the night what kind of guidance there will be, how this goes, or what if this happens, Just cut it. I have learned to trust this kind of “intuition,” which is usually the right decision.
Meditation
Read, research, and learn something constantly.
The weird sense that “it is just money.” Fear and creed are easier to avoid when long-term plans and using money as a tool. It comes and goes…
Be patient, and set long-term goals.
Learning from mistakes.
Find your style. Find what works for you. Following influencers or legendary investors might not suit you and it is ok. I like Peter Lynch and Benjamin Graham. Build your style!
Start writing!

You can also avoid all the above hassle and invest in index funds. For many retail investors, the benefits of index funds – simplicity, cost-effectiveness, and historical performance are the best choice. Why torture yourself with stock picking? It is not easy and never will be easy.

Conclusion

I know that I know nothing. - Socrates

My journey is just starting. Even though I have been in the market for almost 20 years, I began at the top of the dotcom boom by entering an investment competition and placed top 3. I just picked companies with cool names. Whenever I thought I knew it all - I got humbled fast (I was fifteen back then). Of course, I continued to sport betting boom, followed by poker. I understood cash management and the significance of seizing every moment of advantage and optimizing every potential gain.

It's when you think you know everything that the real learning starts. Let the journey shape you.

The real wealth lies in the journey itself. Arm yourself with knowledge and grow your asset portfolio. The only thing you genuinely own are the things in your mind, and everything else can be taken away. With capital, you can protect yourself from the widespread stupidity and challenges in the world (Doug Casey).

Dive deep, stay hungry, and let every setback be a setup for a comeback.