Speculation: A Game You Can’t Win

In this case, you’d likely be elated. You really did predict the top, and got out at exactly the right time. That’s cause for celebration, right?

We’re in the midst of a wild market, with people seeking to convert a thousand dollars into a million within the span of months, if not weeks. The only way to do this is to invest in highly speculative assets and commodities – things that use risk as a selling point, and not as a deterrent. And when you’re willing to lose everything in the hopes of... See more

To be happy that you made money on something that crashes is a form of schadenfreude : a German word for taking pleasure at another’s misfortunes. It’s arguably the lowest of all human emotions, especially if it’s directed toward people that just want better lives. Yet schadenfreude is exactly what we’re embodying when we’re elated that our 10x ret... See more

Let’s say that you bought an asset for $1,000 and then sold it for $10,000, representing a 10x return on your investment.

When you sell something, you do so under the belief that this is probably where the peak will be. You believe that this is the top of the hill, and that it’s time to get out before things may slope in the other direction. And by all measures, a 10x return is something to be quite happy about, especially if you achieved this return within a span of ... See more

And when that happens, you get hit with a heavy tax that is emotional rather than fiscal: Regret.

In the end, a healthy relationship with money stems from how grateful you are for what you have. The constant pursuit for “the next big thing” is a clear indicator that what you have isn’t enough, and it’s worth considering if any amount ever will be.

Once again, you buy an asset for $1,000 and then sell it for $10,000, making a 10x return. But what if a few months later, you see that the asset crashes and plummets down to $1?

We often view the problems of speculation through a fiscal lens, but it should actually be viewed through a moral one. It’s not often viewed this way, but when you take a moment to do so, you’ll see how pernicious it really is.