MicroStrategy: The Legacy of These Exciting Times [Fribble] March 24, 2000

Fribble MicroStrategy: The Legacy of These Exciting Times

By ajvigants
March 24, 2000

This week, MicroStrategy (MSTR) lost more than 60% of its market cap in a single session. (For some Foolish analysis, see Fool on the Hill: A Post-Mortem on MicroStrategy.) This did not affect me personally, since not only did I not own the stock, I'd never even heard of the company. I wasn't hurt. But others were.

Someone called in to the financial television network that I was watching, nearly in tears, to ask the Wise why she had just lost half of her savings. She then asked where she should invest what remained of her nest egg.

As the Wise consoled her and cheered her and told her to "retain the services of an investment professional" to guide her in the future, I felt like screaming. I wished I could reach out, grab her by the shoulders and shake some sense into her. It seemed so clear that this person hadn't taken the time to become educated in matters financial. She probably had some inkling that she could lose money, but blithely assumed that in such a bull (Nasdaq) market, it just wasn't a significant possibility.

As I calmed down, my sympathy for this "victim" diminished. She was a grown woman who had every right to invest or speculate as she saw fit. Her money, her choice. I came to realize that the true crime here was in what she learned from the experience: that she couldn't manage her own money, and that she needed the Wise to do it for her.

The Wise, meanwhile, never considered chastising this caller for being so irresponsible in putting the bulk of her assets into a single investment, into one she understood poorly, at that. The Wise didn't suggest that the caller educate herself with respect to basic investing, and then try again. They told her to give up and hand it over to the Wise. This, of course, is no surprise to the Foolish.

Still, it is sad that the legacy of these exciting times will be largely twofold: (1) those that succeed (by accident) will tend to confuse their own abilities with a bull market and will ultimately give back their gains (and then some), and (2) those who fail will dismiss their own abilities and thus ultimately give theirs to the Wise.