The Truth About “Financial Genius”

Right now, everyone thinks they are a financial genius. Everyone I talk to seems to be bragging about their investment prowess. No matter where I look, prices are inflated. The housing market, the art market, and the stock market are all just slightly out of whack, and the result is a whole lot of unearned swagger. Let’s be clear, I am not innocent here. I have fallen victim to the investment climate myself. I recently purchased a few pieces of art that almost immediately jumped in price. For a second or two I was incredibly impressed with myself. I thought that I had uncovered a previously unknown talent for spotting value in artwork. I immediately started looking for up-and-coming artists that I could help shoot to the moon. It was all very thrilling. 

Once the brain-fog surrounding my art investments cleared, I realized that this moment in time felt eerily familiar. The last time I saw a market like this was in 2006-2007, and we all remember what happened in 2008. The jury may still out on my artistic tastes but one thing is overwhelmingly certain...the most important thing to do right now is prepare. 

The thing is, prices can’t climb forever. The market has a way of resetting itself when this happens. We have seen it time and time again throughout history, but history tends to be forgotten by the individual. Please consider this your reminder. The market may be exciting, but excitement can quickly turn devastating. If you have been enjoying the ride, or maybe even taking more risks that you normally do, now is the time to stop. Do not try to ride another wave, because it may be your last. Stop reminiscing about the horror that was 2020 and start looking forward. If history is indeed about to repeat itself, I predict that 2023 is going to be ugly.

Learning to check your bravado is hard. After all, we all want to believe we are smart and capable. Henry Ford once said, “If you are the smartest person in the room, you are in the wrong room.” I would like to put a spin on that bit of wisdom and challenge you to hold a mirror up to your own perceived intelligence. Before you seek out riskier ventures with “smarter” people, ask yourself whether or not that intelligence is an illusion. Remember the past and face reality. 

Not everyone is a financial genius.