Friends, relatives, and clients will often ask me my opinion on speculative investments.
In my younger days, I responded with something like this.
“Are you crazy? Do you want to lose all your money? If you do this I will not help you or play any part in this impending dumpster fire.”
Times have changed.
No, I won’t greenlight insanity to avoid confrontation or become a Yes-Man.
Nobody wants to be spoken to like they are a child or worse, an imbecile.
Scolding might work for a short time but leads to resentment. An “I’ll show you attitude” raises the stakes and the potential for bigger future gambles and corresponding wealth destruction.
The best way to get people to do the right thing is letting them decide for themselves- with a little help of course.
Done correctly, the right questions slash speculative fever.
A reader sent this in.
“Just wondering what your thoughts are on investing in CBD oils? I curious about the growth and development of medical marijuana.”
Getting into the habit of having no opinion on things you know nothing about is highly recommended. I try to follow this rule whenever possible.
Since I do know something about human nature, a teachable moment emerged. (Shameless and pretentious plug)
My diplomatic response:
As far as investing in speculative things like this you need to ask yourself three questions.
- Do I have an edge?
- Do I have access to more info than others?
- Can I rely on data and my expertise to make a decision or am I just in love with a story?
The answers to those questions will lead you to make a good decision.
Hope that helps.
No need to discuss the best sector ETF, individual stock, or option play as the vehicle to become an overnight medical marijuana millionaire. The beauty of this process is it applies to the speculative mania du jour. Bitcoin, penny stocks or commodities are seamless substitutes.
Honest reflection is a seismic improvement over degrading scolding or an opinionated forecast on fill in the blank.
Human beings are not hardwired for this stuff. Empathy and reason go a long way in the advice business.
Ask the right questions and you will get the right answers.