By this afternoon, it might look downright dreadful—red numbers bleeding across the screen like a gambler’s bad night at the poker table. But before you start wringing your hands or calling it the end of the world, remember: unless you’ve mortgaged the farm to play this game, it’s just another round of the market doing what the market does.
So, while we’ve got this moment of chaos, let’s talk about the psychology of investing—why people win, why people lose, and why some folks seem doomed to keep repeating the same mistakes. It ain’t just numbers and charts; it’s fear, greed, patience, and, above all, human nature.
First a little story about Walter Thornton.
“$100 WILL BUY THIS CAR. MUST HAVE CASH. LOST ALL ON THE STOCK MARKET.”
The man stands there—dignified, desperate, and defeated—draped in the formal attire of the early 1930s. Behind him, a 1928 Chrysler Imperial 75 Roadster, once a symbol of wealth and ambition, now has a hand-scrawled sign that might as well read, “Pride for Sale. Cheap.”
The crash of 1929 didn’t just empty bank accounts; it emptied dreams. Men like Walter Thornton, once prosperous, were forced to liquidate prized possessions at fire-sale prices to scrape together enough cash to survive. That $100 asking price was as much a cry for help as it was a bargain.
Investing and Belief: What Thornton’s Car Teaches Us About Markets
In investing, as in life, people often see what they want to see. Facts might scream one thing, but emotions whisper another—and people listen to the whispers. Fear, denial, and the fear of missing out (FOMO) combine to steer decisions off a cliff.
When the choice arises—invest in a great company during bad times or a mediocre company during good times—the parallels to Thornton’s predicament become clear. Let’s take a moment to unpack this.
The Emotional Pull of Belief and FOMO
- Confirmation Bias:
Investors hold fast to poor decisions, convinced the market will vindicate them eventually. Much like Thornton clinging to his luxury car, they ignore clear warning signs and wait too long. - FOMO and Speculation:
The allure of “can’t-miss opportunities” leads investors to buy stocks at their peak, driven by the belief that the good times will roll forever. Like luxury cars during the Roaring Twenties, mediocrity can look magnificent in the right light—but not for long. - Herd Mentality:
Just as Thornton wasn’t alone in his financial despair, investors aren’t alone in following the crowd. Unfortunately, the crowd often runs in the wrong direction.
Great Companies in Bad Times vs. Mediocre Companies in Good Times
When the tide goes out—and it always does—you want to own something that doesn’t sink.
- Great Companies in Bad Times
- Resilience: They endure. Like a well-built Chrysler Imperial, great companies are designed to weather storms.
- Value Opportunities: Panic creates bargains. Bad times make great companies available for pennies on the dollar, just as Thornton’s Roadster fell to $100.
- Recovery Potential: When conditions improve, great companies roar back, leaving short-sighted investors behind.
- Mediocre Companies in Good Times
- Fleeting Success: They shine bright when the market dances, but when the music stops, they crumble.
- Higher Risk: Mediocre companies lack the substance to withstand bad times. They’re as fragile as a luxury dream during the Depression.
Walter Thornton’s Chrysler Imperial 75 Roadster
The car Walter Thornton auctioned for $100 was no ordinary machine—it was a 1928 Chrysler Imperial 75 Roadster, the pinnacle of engineering and elegance for its day.
- Original Price (1929): Between $2,500 and $3,000—a small fortune at the time, equivalent to about $45,000–$55,000 today.
- Engine and Performance: An L-head inline 6-cylinder engine producing 100 horsepower, with a top speed nearing 95 mph—unheard of in its era.
- Design: Long, sleek lines, luxurious seating, and a rumble seat made it a favorite among the wealthy. Chrysler was ahead of its time, offering advanced features like hydraulic brakes on all four wheels.
But even symbols of success lose their shine when fortunes collapse.
Value Today
If Thornton’s Chrysler were around now, fully restored and polished to perfection, collectors would gladly pay $150,000–$250,000 for it. Even in unrestored condition, it might fetch $50,000–$100,000.
It remains a reminder of a harsh truth: value endures, but only for those with the patience and foresight to see it.
Lessons for Investors: Belief, Strategy, and Survival
The market doesn’t care about your emotions, your pride, or your attachment to what used to be. Walter Thornton’s Roadster reminds us of the importance of:
- Focusing on Quality: Invest in companies that can survive bad times, not ones that only thrive when the sun is shining.
- Avoiding FOMO: Don’t chase trends or overpriced mediocrity—what looks like a bargain might be a mirage.
- Recognizing Opportunity: When great assets are undervalued, don’t hesitate. Thornton’s car was worth thousands, but desperation made it $100.
Final Thoughts
Markets rise and fall, fortunes are made and lost, and pride often stands in the way of good decisions. The crash of 1929 reduced a magnificent car to a bargain-basement sale, but its value endured, waiting to be rediscovered.
In investing, it’s better to own greatness during tough times than mediocrity in prosperity. For those who can see past the chaos, the rewards are waiting—much like Thornton’s Chrysler Imperial, gleaming through the dust of history.
Some other links that you might fine interesting
P/E Ratios: The Good, The Bad, and The Downright Ugly
Trader vs Investor
Life, Investing, and Baseball: Winning by Avoiding Mistakes
Gambling is a TAX on stupidity
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