How Not to Invest With Barry Ritholtz, Dip Buyers Winning, Coreweave
Mar 25, 2025
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Barry Ritholtz, Co-founder and Chairman of Ritholtz Wealth Management and author of "How Not to Invest," dives into key lessons on recognizing investment pitfalls. He discusses the psychological aspects influencing financial decisions while critiquing labor market dynamics. The conversation shifts to CoreWeave’s IPO, addressing its transition from crypto to AI and the complexities that lie within its financial health. They also explore the impact of cybersecurity on investments, making it a timely discussion for today’s market.
Barry Ritholtz emphasizes avoiding common investment mistakes by learning what not to do, which can enhance overall portfolio management.
Understanding market sentiment reveals behavioral complexities among retail and institutional investors, particularly during downturns, aiding strategic decision-making.
Effective risk management relies on crafting a solid financial plan, as many investors fail to prepare for unfavorable market conditions.
Deep dives
The Importance of Learning from Mistakes
The conversation highlights the significance of understanding what not to do when investing, as emphasized in Barry Ritholtz's new book, 'How Not to Invest.' He argues that learning from negative examples can be more impactful than following positive strategies, as most investors are often unaware of their own blind spots. The idea is that by compiling a list of common investment mistakes, individuals can avoid them and improve their overall portfolio management. This approach encourages investors to be proactive in recognizing potential pitfalls rather than just mimicking successful strategies.
Identifying Bad Investment Practices
Key bad investment behaviors include chasing after trends, allowing emotions to dictate decisions, and failing to recognize personal biases. Ritholtz points out that many investors often react to market fluctuations without a solid financial plan, which can lead to significant losses. He emphasizes the need for self-awareness and caution in making investment choices, especially in volatile markets. By sharing insights into the management of emotions and behaviors, investors can better navigate market uncertainties and reduce the risk of making impulsive decisions.
The Role of Market Sentiment
Market sentiment plays a critical role in influencing investment decisions and can often contradict economic fundamentals. The podcast discusses the importance of understanding how individual investors remain optimistic even in the face of market downturns, with many continuing to invest despite losses. This resilience can create a disconnect between retail investors and institutional investors, as the latter often make more risk-averse decisions amid market corrections. The contrasting behaviors highlight the complexities of investor psychology, especially during bear markets.
Analyzing Upcoming IPOs
The discussion incorporates an analysis of the upcoming IPOs for companies like eToro and CoreWeave, exploring both the potential and pitfalls associated with them. It is noted that while eToro is riding the wave of increased cryptocurrency trading, its future is tied to market performance and public interest in crypto. Conversely, CoreWeave, a provider of infrastructure for AI and cloud services, raises concerns due to its significant debt and reliance on a single major customer. These factors prompt investors to critically assess the viability of these companies in the current economic landscape.
Understanding Economic Innumeracy
Barry emphasizes the concept of economic innumeracy that affects many investors, leading them to misinterpret basic financial principles. An example discussed is the misleading perception of inflation and purchasing power over time, where many neglect the growth of income relative to the dollar's depreciation. By providing relatable examples, Ritholtz aims to shed light on the discrepancies in understanding economic data, especially regarding net worth and market returns. This encouragement to enhance financial literacy is essential for making informed investment decisions.
The Need for Controlled Risk Management
Effective risk management is a crucial theme throughout the podcast, with Ritholtz advocating for a clear financial plan that outlines risk tolerance and investment goals. He points out that many investors approach the market without a plan, relying instead on the hope for returns without contingency strategies. This lack of foresight can lead to significant meltdowns during unfavorable market conditions, underscoring the necessity of disciplined investment processes. By recognizing the importance of purposeful investment strategies, investors can safeguard their portfolios against unforeseen challenges.
On this TCAF Tuesday, Downtown Josh Brown is joined by Barry Ritholtz, Co-founder and Chairman of Ritholtz Wealth Management to discuss his new book release "How Not to Invest". Then at 39:18, hear an all-new episode of What Are Your Thoughts with Josh Brown and Michael Batnick! They discuss the latest market moves, cybersecurity stocks, the Coreweave IPO, levered ETFs, and much more!
This episode is sponsored by Betterment for Advisors and Rocket Money!
Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management.
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