Advice for Giving Advice

January 3, 2021 by Michael Batnick

What do you say when somebody asks you what they should do with their portfolio?

Here’s what you say, “Sorry, I can’t help you.”

I know that sounds oddly robotic, especially if you work in the financial services industry.

In general, people who don’t work in finance expect those who do to have an opinion on Apple, Tesla, Bitcoin, or whatever they’re asking about. So they’ll probably look at you like you have two heads if you come to them with that response. A way to soften this is to joke, “If I could see the future then I’d be happy to tell you what to do, but I cannot, so I will not.”

What’s the big deal, you might be wondering? Why not just answer somebody’s honest question? Nothing good can come from giving casual investing advice. Nothing. Especially when it comes to the future direction of an individual security. They won’t remember what you said. They’ll only remember what happens.

 There are 4 possible scenarios to the question, “Should I buy x?”

You say buy, and it goes down. You were wrong, and they’ll never forget.

You say buy, and it goes up. You were right, but they’ll forget.

You say don’t buy, and it goes down. You were right, but they’ll forget.

You say don’t buy, and it goes up. You were wrong, and they’ll never forget.

In the words of Adrian Balboa, “You can’t win!”

I recently found myself in the fourth scenario. On November 17th, with Bitcoin at $17,500, my brother-in-law texted me the following: “Hey. What do you think about buying 1 share of bitcoin?” He knows my shtick. We’ve had these discussions before. He knows that I avoid these questions at all costs. But I had to give him something. I couldn’t just not respond. Here’s what I wrote:

“I would have felt better about saying “sure, why not?” a month ago. But it’s up 40% in the last month alone, so I wouldn’t feel great about saying “yes, now is a good time to buy.” That said, no guarantees you’ll get a chance to buy it lower.”

To continue reading, please go to the original article here:

https://theirrelevantinvestor.com/2021/01/03/advice-for-giving-advice/