It’s uncommon to run across a LinkedIn profile that changes every six months, but once in a while, you’ll come across that one “investment expert” that’s continually changing his profile.
First, he was an expert in dotcoms in 1999, then cannabis in 2012, blockchain in 2016, crypto in 2021, and now he’s an NFT expert. He’s always an expert in the next big thing, but it makes you wonder if he was so good at something, then why does he keep moving on to other things?
The current crop of investors do not want to miss out on the next big thing. They want to be early adopters of that next big trend or technology.
Wall Street and crypto exchanges take advantage of this investor desire to be first movers, to look cutting edge, and be part of the crowd. They prey on these behavioral tendencies to hijack investor rationale by bombarding their audience with flashy ads about emerging technology and “assets” to hook them in.
One example of marketing tactics to attract current investors is a recent advertisement for crypto exchange crypto.com starring Matt Damon, which features the tagline, “Fortune Favors The Brave.” It’s a play on the long-standing “Fortune Favors The Bold” quote.
The message to investors is that if they want to get rich, they’ll have to take chances. They’ll have to take risks on new asset classes and new technologies. “Be Cool… Don’t Miss Out…” is the message being transmitted. Smart investors don’t fall for the bait.
While young and impressionable investors latch onto the “Fortune Favors The Brave” battle cry, smart investors stick with the mantra, “Fortune Favors The Boring.” Chasing fads is typically a strategy for losing money. Smart investors know this and would rather put their money to work in assets that can grow wealth consistently and reliably.
While mainstream investors play the lottery chasing the next big thing, savvy investors stick to tried and true investments. Smart investors don’t gamble or speculate. They’re not averse to risks as long as they can mitigate those risks. It’s the boring investments that allow them to mitigate these risks.
While fad investments are exciting to talk about around the water cooler, it’s a timing game with those types of assets. They drain a lot of energy and time trying to buy and unload assets to take advantage of surges and avoid dips.
Ultra-wealthy investors are ultra-wealthy for a reason. They eliminate all the headaches from their investments. They want to invest and forget. They prefer simple and boring because simple and boring can be replicated.
Passive investments in cash-flowing commercial real estate and businesses allow investors to invest and forget. These assets are illiquid and require a long-term commitment – a commitment wealthy investors are willing to make because they can put the investment out of their minds and focus on what’s important to them.
For the invest and forget crowd, leveraging the expertise of others through a co-investing arrangement like a syndication or private fund allows investors to create passive income streams from boring assets like commercial real estate and income-producing businesses without getting their hands dirty.
These passive assets are ideal for building wealth because they offer consistent income and growth that NFTs, crypto, and meme stocks can’t offer and can be replicated to generate multiple income streams.
Why do the wealthy prefer boring? Because boring passive assets like real estate and income-producing businesses offer major advantages, the next big thing investments can’t offer.
These advantages include:
- Hands-Off Simplicity.
- Above-Market Returns.
- Hedge Against Inflation and Recessions.
- Tax Benefits.
- Risk Mitigation Through Management Experience and Expertise.
Because of these benefits, fortune favors the boring, not the bold.