2020, a year of regrets?


Happy holidays everyone, I hope your Christmas was wonderful in this odd year where it may have looked very different for the majority of you.

The week between Christmas and New Year’s always brings with it a time to reflect on the past year, and if you read other financial content you will see a number of “The Good, The Bad, and The Ugly of 2020” posts. I am not a typical financial planner, and this isn’t your typical content. Why rehash the events of a very long, and difficult year just for the sake of annoying ourselves? What I do want to address is how a small number of people, probably only enough to fill a high school gymnasium have made us all feel like we missed the boat a dozen times this year.

Davey Day Trader

Dave Portnoy, the founder of Barstool Sports adopted the moniker Davey Day Trader during the Corona Virus pandemic because sports was shut down. See Dave is a sports gambler, but he switched his focus to day trading, when sports leagues shut down early in the year. This, amongst other things, helped fuel the rocket like growth of Robinhood and day trading this year. I bet at Thanksgiving dinner you heard from someone about how they made a killing trading Bitcoin, or Tesla, or playing with risky investment instruments like options. So now you’re kicking yourself thinking that you missed the signs, and missed the boat a dozen times this year.

Let me say this, I love what Dave Portnoy did, because he got people interested in investing and saving. Yes, a bunch of young adults are going to lose money thinking they are smarter than the experts, but they will learn, and it will spark a fire that will serve them well when they realize building wealth, or “getting rich” the way day traders think about it, is more about your savings rate than it is your investment returns.


The Ship Has Sailed

Okay, back to missing the boat. Remember that high school gymnasium full of people I mentioned before? That’s about the number of people who actually used intelligence, information, and a whole lot of luck to make some incredible trades this year and truly slingshot themselves into another socioeconomic class. I am sure you will read articles about the guy who bought 32K of Tesla options and turned it into 2Mil. It’s incredible, but I promise you, your neighbor, or your nieces’ fiancé isn’t one of those people. What that article leaves out is the tens of millions of dollars that was lost on those same options by traders who got it wrong.

The stock market isn’t meant to make you rich overnight, it’s meant to build wealth over time. Did you leave your plan alone this year? If you did, then I am here to tell you, you win! If you did nothing this year, and let the markets do what markets do, and didn’t let your emotions take hold, you won the year 2020.

This as a year that made you feel the 2 polar ends of the investment emotional spectrum. You felt immense fear in February and March watching the indices fall 30+% in a month, and then the greed kicked in as you saw the meteoric rise of mega cap tech companies, speculative investments like bitcoin, and topped off with a dash of boasting by people in your sphere of their incredible investment returns.

You know what really happened in 2020? People panicked. They got scared or lost their job or had a medical emergency, or 100 other things that would have caused them to have to zig when their plan wanted them to zag. Some people thought they could outsmart the stock market and day traded or bought and sold in their accounts in hopes of hitting it big. Most missed out on the fantastic market returns that were there for the taking if they just left your plan alone. Most missed the compounding growth that would happen because they didn’t have an adequate cash basket built up so when job loss or some other bad luck that happened to chance upon them caused them to be forced to dip into their medium- and long-term baskets of money.

Look back at 2020 and think about how successful you were. You kept your plan going, or you didn’t blow it up. You worked at home, didn’t see family and friends, maybe homeschooled your children and overcame countless other obstacles. Everyone deserves a round of applause, and I’m here to give it to you!

So What?

So how does this impact all of you?

  • 2020 was hard, if you stuck to your plan, you win!
  • Boasting about gains is just that, boasting. Take with a grain of salt
  • 2021 has to be better than 2020 right? Right!?!

Stock market calendar this week:

Latest Covid-19 Data

covid data dec 28 chart