During the height of the COVID-19 pandemic, something unexpected happened in the investing world. Millions of new investors were drawn to the stock market — the exact opposite of what happened during the Great Financial Crisis of late-2007 to early-2009.
If you’ll recall, early-2020 was a frightening time to be an investor. In the span of just 10 trading days, beginning in mid-February of that year, the U.S. stock market fell -34%. It had never fallen that far, that fast.
And yet, instead of scaring people away from the market, a strange confluence of events ended up enticing many people to begin investing for the first time, especially young people.
A perfect storm
During the pandemic, with professional sports mostly shut down, one particularly prominent sports betting proponent turned his attention to the stock market and began live-streaming his day-trading. At the same time, a popular investing-related online forum encouraged followers to band together to buy shares of several beaten-down so-called “meme” stocks, artificially inflating prices in a quest for short-term profits.
Major media coverage put fuel on the fire, giving the impression there was easy money to be made. Perhaps further emboldened by the extra stimulus money in their pockets, people crowded around as if gathering to see someone with a hot hand at a Las Vegas roulette wheel, eager to take a seat and place their own bets.
For those of us promoting a “steady plodding” approach to investing (Proverbs 21:5, TLB), it was a discouraging time. So, it was a relief when the worst of the pandemic subsided and things seemed to get back to normal in the investing world. At the beginning of this year, Fast Company declared, “RIP Meme Stocks.” It noted that the stock prices of several pandemic-era high flyers were 85-90% off their highs.
However, just a few weeks ago, The Wall Street Journal announced that “Meme Stocks Are a Thing — Again.” It said that soaring shares of struggling Tupperware and the recently-shuttered trucking company, Yellow, are signs that an “old-fashioned meme-stock rally” is underway.
A time of opportunity
At SMI, we don’t worry that our members are going to suddenly drop all reason and take up day-trading meme stocks. But it’s worth remembering that each day will be filled with headlines about people discovering new paths to quick riches or dire warnings of impending doom — and that there’s a big difference between objective signals and click-bait noise. It’s also worth re-upping a commitment to taking a steadier (i.e., boring) path to the accomplishment of your financial goals — a path marked by a plan and a long-term perspective.
The fact that the pandemic helped bring so many new investors to the market, and even today's continued interest in meme stocks, also presents an opportunity for all who care about promoting a biblical approach to managing money.
Historically, stewardship ministries have been widely viewed as mostly about helping people get out of debt or learn how to use a budget. Now would be a perfect time to offer classes on investing, perhaps using SMI’s Multiply study as a resource. Now would be a perfect time for experienced investors to come alongside younger colleagues or family members to open up conversations about investing and introduce key biblical principles that apply to investing. And now would be a perfect time for parents to begin teaching their kids about investing, perhaps using Trusted as a resource.
In so many ways, our culture seems to be moving away from a biblical approach to living. We can get discouraged about it, or we can get in the game and do something about it.
Are you actively involved in teaching others a biblical approach to managing money? To be sure, money is a very personal topic. Still, why not try to open up a conversation about investing with someone you know? You could use the Journal article linked to earlier in this article as a conversation starter. That might prompt some interest in the idea that there are biblical principles that apply to investing. And, depending on where the person is with matters of faith, it might start an even more important conversation.
