Every October, we decorate our homes with skeletons, don elaborate costumes, and pretend we enjoy being scared. But investors — the poor, thrill-seeking creatures that we are — don’t need haunted houses. The markets provide their own jump scares, complete with flickering charts, eerie acronyms, and the occasional ghost of financial decisions past.
If you listen closely, you can hear the whispers: “Buy the dip… diversify later…”
As an avid horror movie buff and a darkly amused observer of investor behaviour, let me use the excuse of the Halloween season to draw mildly clever analogies that guide you through the haunted corridors of modern investing.
The Rise of the Quirky Acronyms
The stock market is many things — a pricing mechanism, a global capital allocator, and, occasionally, a stage for some truly bizarre theatre. It doesn’t just produce returns; it produces stories.
Once upon a time, the powers that be discovered that if you string together a few promising stocks or countries and give them a catchy name, people will believe in them forever.
In the 1960s, it was the “Nifty Fifty,” a set of blue-chip darlings considered so indestructible you could buy them at any price and allegedly never lose. In the 2000s, there were the BRICs (Brazil, Russia, India, China), randomly packaged together for quick consumption as the world’s next growth engines. More recently, FANG (Facebook, Amazon, Netflix, Google) evolved into FAANG, then into MAG7, because apparently seven is the new four.
Acronyms are comforting. They make investing sound like a club, or at least a Scrabble game. But they’re often catchier than they are useful.
Decoding them can feel like playing Sudoku where someone’s swapped out a few digits: you convince yourself there’s a pattern, even as the puzzle stops making sense. Investors do the same — holding on to old labels long after they’ve stopped adding up.
- Horror movie equivalent: The Cabin in the Woods — you think you know the genre, but it’s really just another elaborate setup.
The Meme Stock Séance
For a brief, caffeinated moment in 2021, the stock market became a grade school sleepover. Everyone stayed up too late, dared each other to buy GameStop, and claimed they could talk to the spirit of Warren Buffett through Reddit.
Valuations rose from the grave, untouched by fundamentals or basic arithmetic. It was democracy meets chaos, with emojis. When it was over, the hangover was brutal. Many learned this ancient investing truth: just because something is trending doesn’t mean it’s immortal.
Fads fade, but strong companies with durable earnings, bought at a reasonable price, tend to serve long-term investors much better.
- Horror movie equivalent: The Scream series – self-aware, overhyped, and ultimately a cautionary tale about confusing irony with safety.
The Fog of U.S. Overconcentration
We all know the classic horror trope where the house that looks perfectly normal is actually sitting on cursed ground. Now I’m not saying that’s the U.S. equity market… but let’s dig in.
We know we’re supposed to diversify, still it can be hard to resist the warm glow of American exceptionalism. The S&P 500 has become the financial equivalent of a pumpkin spice latte: comforting, everywhere, but not nearly diversified enough (all I’m saying is don’t sleep on the brown sugar oat milk latte).
Consider this:
- The U.S. equity market has never been more top-heavy with largest ten top stocks making up roughly 38% of the total market capitalization.
- Canadian investors can’t seem to get enough of U.S. markets, pouring about $59.9 billion CAD into American equities and debt between January and May of this year alone.
Meanwhile, the rest of the world’s markets languish in the basement, covered in cobwebs, mumbling, “Remember us?” But overconcentration is a quiet kind of horror. It doesn’t jump out and scream — it just slowly takes over the plot until there’s nowhere left to hide.
If you want a deep dive on this spooky reality, check out Purpose Associate Portfolio Manager Brett Gustafson’s recent article The Comfort Trap.
- Horror movie equivalent: Get Out – you think you’re in a safe, unremarkable environment, until you realize you should have left 20 minutes ago.
How to Keep the Monsters at Bay
If you’re retired, or on the way there, your goals are probably simple: protect your capital, generate a steady income, and sleep at night.
But real nightmare fodder can disguise itself. So, what can a sensible investor do?
- Don’t chase ghosts. If an investment comes with a catchy name, it’s already been discovered. Ask what’s underneath the white sheet.
- Revisit your portfolio’s cast of characters. If U.S. stocks have quietly taken over the starring role, consider adding some global exposure to balance the plot.
- Talk to your advisor before you act. Especially if you find yourself thinking, “Everyone’s doing it.” That’s usually when the lights start flickering.
As the pumpkins glow and the markets twitch, remember: the scariest thing in investing isn’t volatility. It’s forgetting that markets, like haunted houses, are designed to make you panic.
Stay calm. Stay diversified. And if you hear whispering in the dark, it’s probably just the ghost of your GameStop investment.
Happy Halloween. 🎃
PS: You didn’t ask but my all-time favourite horror movie and top spooky recommendation is the 2014 horror/comedy Housebound. Check it out.
Vanessa