From 1995 to 2018, Monster Beverage––purveyors of only the finest sugar-filled, neon-coloured, caffeine bombs––was one of best-performing NASDAQ stocks. If you invested $10,000 in 1995 into Monster, you’d have over $30 million in 2018. In that time the stock increased over 300,000%.
Imagine what it must’ve been like owning that stock during its meteoric rise?
Everyday opening the newspaper, smiling at the bucket of money you (yet again) made, telling your boss to suck it when you quit your unfulfilling job, making love to your wife in the middle of the day . . . Ahh, if you could only go back in time.
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Here’s what’s missing:
During Monster’s meteoric rise, its stock traded below its previous high 95% of the time. Four separate times it lost 50% of its value.
I’m not a finance guy. When people ask me why I became a personal trainer I jokingly tell them that the guidance counsellor in high school asked me to count to 12. I lost count at 7 and told her ”3 more”. She then handed me a clipboard and a pair of sweatpants and said “have at it”.
If you‘re also not a finance guy, here’s what the above means:
The literal best performing stock of the past two decades appeared to be failing 95% of the time.
According to finance journalist Morgan Housel, “what now looks like a slam-dunk story was, at any given time in the last 20 years, an easy story to criticize.”
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No telling you boss to suck it . . . No quitting your unfulfilling job . . . no daytime lovemaking (well, maybe some. But any afternoon delights would’ve been unrelated). . . None of that.
Owning the stock would’ve been rapt with doubt and worry. There’s no free lunch––even if you got lucky or somehow knew ahead of time in 1995 that humans were going to really, really love ingesting sugar-filled neon-coloured caffeine bombs.
Try to skew the odds in your favour but also unbrace unpredictability.
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The New Yorker essayist Tim Krieder once wrote that “life is an adventure, not a test. There are no correct answers in the back of the book; we don’t get to find out what was behind door number two; we never even know whether we won. If you want some guarantee that everything will turn out all right and you’ll have no regrets, it’s not an adventure you want; it’s a theme park.”
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As the saying goes, hindsight is 20/20. And holy hell that’s true.
History has a habit of smoothing out the edges. As Steve Jobs said, “you can't connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future.” Nothing is as simple as history makes it it seem.
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Monster isn’t the exception, it’s the rule.
Netflix’s stock price increased 35,000% from 2002 to 2018. It also traded below its previous high on 94% of those days. Amazon lost 90% of its value from 2000-2002. On September 3, 2020, Apple lost $180 Billion in company value. And so on. The correct lesson to take from outliers is that their success is not a straight line; it’s a Goddamn roller coaster run by some carnie chugging chocolate milk in the sun.
Even if you’re going forward, it’ll feel like you’re going backwards. Worst yet, it’ll feel like you’re the only one. Believe me when I tell you that others feel the same thing as you, too.
They’re too close to their own thing, just like you. You’re too close to yours.
Our brains can’t comprehend our world’s complexity. In response, we create cause and effect narratives when they don’t exist. Humans are a post-rationalizing species.
