7investing CEO Simon Erickson describe why 7investing is a personal journey and why he's optimistic about 2023.
December 21, 2022
2022 has been a year that Santa’s already marked as “naughty” on his list. And this year’s volatility has brought a flood of opinions with it about how we should be thinking about the stock market right now.
Some investors believe that a sea change is underway that will drive investors into bond markets. Others have been claiming every single month that we’ve hit rock bottom and a bullish turnaround is inevitable. At the same time that Cramer is slamming the Buy Button on CNBC, there’s an Inverse Cramer ETF emerging who will be making the opposite call on everything he recommends.
All of this is just getting overwhelming. Who are we actually supposed to believe?
The answer to that question is that we need to reframe the conversation.
As humorous or as frustrating as the financial media might be, investing should not be confused with ego, hubris, or pride.
At this very moment, I am willing to bet that thousands of contributors are posting their personal stock trades to Twitter or to other platforms where this is encouraged. These are supposedly to encourage transparency; to show everyone else exactly what these people are buying and selling in order to share information that is actionable and valuable.
But it’s closer to the truth that neither of those is actually happening. The voluntary disclosure of stock trades through the social media megaphone is typically done for one of two reasons. The first is to boost the ego of the contributor. He or she wants to show off to others how smart they are if their stock picks go up. The second reason is more self-motivated, where he or she is actively trying to drive up a stock’s price by convincing others to also buy in. And that’s getting dangerously close to what the SEC defines (and then investigates) as market manipulation.
So let’s get back to the true meaning of
Christmas investing. Investing should be about much more than hyperbolic language in TV interviews, rapid-fire Buy Button slamming, or bragging rights on Twitter.
Investing is meant to be a long-term journey that you personally embark on to improve your financial future. It isn’t a one-size-fits-all approach, where we all blindly follow those who bark the loudest. It should mean different things to different people, since we all have our own unique risk tolerances, time horizons, and comfort zones.
We should also address the elephant in the room: 2022 has been a terrible year for investors and has erased a lot of money from our brokerage accounts. In fact, one of the most common questions I’m getting asked right now is whether investors should adjust our strategies going forward.
There’s a delicate balance between sticking to your guns and being flexible as things change in the market.
At one extreme, planting your feet into the ground and refusing to change your opinion is a great way to lose money. Companies show very clear danger signs of when they’re in trouble, especially in times of macroeconomic mayhem when there’s reduced consumer spending or rising borrowing costs. Diligent investors can pick up on these financial smoke signals to exit their positions of companies that will likely underperform the broader market. Just this past month, our team announced we’d be permanently selling these nine stocks.
At the other extreme, it rarely pays off to simply follow the crowd. Those who try to time the market — i.e. get in and out of its shiniest new objects — often get destroyed once that initial luster wears off. Think of anyone you know who bought at the top of GameStop (NYSE: GME) or AMC (NYSE: AMC), at peak Bitcoin, or at the IPO of a questionable-at-best SPAC for a company who had no competitive advantage. You need to have roadmap of investing rules to follow, a thesis of why you’re buying your stocks, and an ability to tune out the siren song of FOMO.
I write all of this to frame our 7investing mission, which is empowering individuals to make better financial decisions. We want to give you the tools that will help you navigate this long-term journey called investing. Even in turbulent years like 2022.
Our tenured advisor team — who combined have 140 years of investing experience and six graduate degrees — burn the midnight oil every month to find the market’s best companies. We capture those in our formal recommendations.
But rather than publicly posting our buys, their tickers, and 280 characters about them on Twitter, we instead write thorough research reports about what exactly led us to these companies. On top of that, we defend our rationale in video team calls (which includes a team Q&A) and then continue to discuss the picks on a 24/7 basis in our community forum.
2022 may have been a reset for the equity markets, but it also brought some incredible breakthroughs with it as well. Doctors are figuring out how to detect earlier-stage cancer and to use AI to develop novel therapies. We’re learning more about the universe and are launching a new space economy. And we’re even making progress toward nuclear fusion as a source of sustainable energy.
There’s a ton of innovation on the horizon. I’m looking forward to what lies ahead in 2023.
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