Some of the best investment lessons don't come from Wall Street. They come from watching how people behave when markets make investing look easy.
Over the past few months, I've noticed something changing in the conversations I'm having with clients.
It's no longer just younger investors asking about the latest hot stock.
I've had clients in their 80s and even 90s ask whether they should sell conservative investments to buy into the next big IPO.
I've had lifelong income investors ask whether they should sell bonds to buy individual AI stocks.
I've had clients who have never owned an individual stock suddenly become convinced that's the key to building wealth.
One conversation from just the other day really stuck with me.
A client in her late 70s called to review her portfolio. She's retired, lives off the income her investments generate, and has a plan that was intentionally built around preserving her lifestyle while generating dependable income.
While we were talking, I could hear a younger woman in the background.
"Ask him if you own Nvidia."
A few seconds later my client asked,
"John...how much Endivia do I own?"
I couldn't help but smile.
Not because she mispronounced Nvidia.
Because it perfectly captured what I've been seeing.
She didn't know the first thing about Nvidia.
She simply knew she'd heard the name so many times that she assumed she needed to own it.
That's not investing.
That's fear of missing out.
I've had other clients proudly pull out their phones to show me self-directed accounts and tell me how well they're doing picking stocks on their own. Some have even moved money away from professionally managed portfolios because, quite frankly, investing feels easy right now.
And that's exactly what worries me.
Not because these companies are bad investments.
Many of them are incredible businesses.
Some may very well become the next generation of market leaders.
The concern isn't the companies.
The concern is when markets become so forgiving that we start confusing a favorable environment with investing skill.
Bull markets have a funny way of making almost every decision look brilliant.
Raven the Monkey
This isn't the first time we've seen this.
Back in 1999, during the height of the dot-com boom, a chimpanzee named Raven became a Wall Street celebrity.
As part of a publicity stunt, Raven picked stocks by throwing darts at a board.
The result?
Her portfolio (the MonkeyDex) gained more than 200% in a single year, outperforming thousands of professional money managers.
The financial media couldn't get enough of it.
A monkey was beating Wall Street.
It made for a fantastic story.
What almost nobody remembers is the following chapter.
When the dot-com bubble burst, Raven's gains disappeared.
By the end of 2002, virtually all of them had been wiped away.
Raven didn't suddenly become bad at throwing darts.
The market simply stopped rewarding almost everything.
That's the lesson.
Sometimes success says as much about the environment as it does the investor.
Every Generation Thinks This Time Is Different
Before anyone misunderstands me...
I'm not suggesting AI is another dot-com bubble.
I don't believe that.
Artificial intelligence is real.
Many of today's companies are generating real earnings, real cash flow, and building technologies that are going to reshape the world.
I own some of them myself.
But while technology evolves...
Human nature doesn't.
Every generation becomes convinced the winners will keep winning.
Every generation starts believing investing has somehow become easier.
Every generation eventually rediscovers that markets have a remarkable way of humbling even the most confident investors.
So...What Are We Doing?
Honestly?
Not much different than we've always done.
We're still looking for long-term opportunities.
But we're also continuing to diversify.
We're still paying attention to valuations.
We're still managing risk.
We’re still aligning portfolios with each client’s unique risk tolerance.
We're still reminding ourselves that no matter how exciting today's opportunities become, protecting capital is every bit as important as growing it.
That probably isn't the most exciting strategy.
But history suggests it's one of the more durable ones.
One Final Thought
One of my favorite Warren Buffett quotes is:
"Only when the tide goes out do you discover who's been swimming naked."
I've been doing this for more than two decades, and one thing I've learned is that markets change far more often than human behavior does.
Bull markets hide mistakes.
Bear markets expose them.
That's why periods like today require even more discipline than periods of fear.
So the next time someone asks me how much "Endivia" they own...
I'll smile.
Not because it's a silly question.
But because I've heard versions of that same question throughout my career.
At the onset of my career, it was internet stocks.
Then it was housing.
Then it was cryptocurrencies.
Then it was meme stocks and SPACs.
Today it's AI.
Tomorrow it'll be something else.
The names will change.
The technology will change.
The opportunities will change.
Human nature won't.
The best investors I've worked with over the past twenty-plus years weren't the ones who made the most money during the easiest markets.
They were the ones who remained disciplined when everyone else became convinced investing had suddenly become easy.
Because sometimes the greatest risk isn't making the wrong investment.
It's believing that investing itself has become easy.
Important Disclosures
John B. Petrick is a registered representative with and securities offered through LPL Financial. MemberFINRA/SIPC. Investment advice offered through Perennial Investment Advisors, a registered investment advisor. Perennial Investment Advisors and Perennial Financial Services are separate entities from LPL Financial.
This material is for general information and educational purposes only and is not intended to provide specific advice or recommendations for any individual. Investing involves risk including the loss of principal. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Any economic forecasts set forth may not develop as predicted and are subject to change. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.