/*Disclaimer – I am in no way offering the below as actual financial advice. If you are devoid of a sense of humour, or lack the gene required for detecting sarcasm; please dismiss the following post as the ranting of a unstimulated mind.*/
There has been a lot of talk of share market crashes and billions of dollars in value wiped from investor’s pockets of late, so if you are a potential investor or already have your own portfolio, you might be a bit distraught over what is going on.
For those of you worried about the share market I am here to tell you it’s time to relax! I am a market veteran (been buying shares for what must be months now), so here are a couple of tips and expert advice in handling investor anxiety.
Tip No. 1: Invest in crazy shit like salmon farms and electric cars.
If you do so, your shares will go all over the place all of the time, so when the market crashes it doesn’t affect you, because you are already used to sudden and devastating losses in your portfolio. I recently invested in a salmon farm and a company that does aerial photography. The share prices almost immediately went down (market analysts out there take note; your best indicator of a share about to plunge is simply whether or not I buy it). Down, then slightly up, but always down a bit more the next day; like a poorly flung yoyo. I can’t even remember what initial price I got half my shares at because their current values are so disparate from their originals that any sense of loss I have is numbed to a pleasant tingling sensation in my wallet.
But perhaps you are someone who is a bit more attuned to their personal wealth; maybe you like numbers, and such a slide in your personal wealth will be noticed, and slowly niggle away at your mind. Fear not; I have more investing techniques up my sleeve:
Tip No. 2: Buy international shares.
International shares help muddy up the waters when you want to understand (or be ignorant of) just how much money you have lost. They do this through the magical financial multiplier known as an ‘exchange rate’. Exchange rates tell you how much of some other form of money, your current form of money used to be worth, before it inexplicably declined in value. Thus if you buy international shares, the exchange rates distort the numbers; sanding away the rough edges of a market slump so that you are left with a roughly hewn “I guess I haven’t lost that much” attitude.
I bought Tesla Motors stock eager to be a part of the coming Electric Car Golden Age™, safe in the knowledge that Elon Musk would launch us into the future like one of his SpaceX rockets. Perhaps I should have taken into account that SpaceX’s rockets are striving to be reusable, so while they may soar to impressive heights (Tesla stocks had an all-time high of $291!), they also like to frequently return to their earthly lows (as of this moment, they are sitting at what I hope is a launch pad level of $220).
But the beauty of all this is that though my shares have in a sense lost value, that value isn’t something I can easily picture in my mind; it’s not like when my Nearmap shares went down $50, and I could taste the loss as a bottle of scotch I never got the chance to buy. Because my stocks are from the United States, I first have to try and remember what Australian dollars I spent on them, then how that converted into US dollars at the time, then how much the strength of our currency has changed since, and thus what these American dollar stocks would be worth if I sold them and recouped my losses in Australian dollars at the current exchange rate. I am sufficiently confused just writing it down!
They say you have only lost money on the share market if you get scared and sell your shares at lower than you bought them. Thus the foggy nature of international shares helps you to not even understand what your balance sheet looks like, which reinforces the deeply engrained aversion to action hidden away in our ape brains by evolutions invisible hand*. This in turn stops us from being a slave to the impulse to sell brought on by doomsday headlines and sensational talk about ‘financial crises’.
For those of you still sceptical, I will finish this post by leaving you with one last reason to buy international shares; because in America they are called stocks. Not only does that sound cooler^, but what you wily investors will now have is two portfolios; a stock portfolio, and a share portfolio. That’s not just diversification of companies, or industry types; that’s diversification on a thesaurus level.
P.s. The above post is quite tongue-in-cheek (whatever that means), and I am actually quite happy with my share picks this year (just not at this particular point in time).
*Note: Not Adam Smith’s invisible hand; that’s another story.
^ You can check the comparative coolness of words here: https://books.google.com/ngrams/graph?content=stockmarket%2Csharemarket&year_start=1800&year_end=2000&corpus=15&smoothing=3&share=&direct_url=t1%3B%2Cstockmarket%3B%2Cc0%3B.t1%3B%2Csharemarket%3B%2Cc0