Ignore at any price

BAAP, SAAP, HODL. And probably many more that I haven't heard of. Perhaps some of my readers may also be unfamiliar with these, so I'll just spell them out. BAAP is 'buy at any price', SAAP is 'sell at any price', and HODL is 'hold on for dear life'. There's a whole zoo after that. In response to a tweet from someone with 2.5 million followers asking what the opposite of HODL was, I came across SODL, DUPM, FODL, FOOM and many others. Characteristically, no one explained what they meant, so perhaps they were mostly just some nonsense that people made up, which is not the most unusual thing to happen on Twitter.

Have you noticed that the BAAP-SAAP-HODL trio is actually not a new choice for investors? Between the three of them, you just have an up-to-date version of the old trinity of Buy, Sell or Hold, except modified for the age of social media, crypto and meme stocks. It's the same thing, except for one difference, which is a big one. The difference between the old buy-sell-hold choice and the new ones is the amount of thought that is supposed to go into the decision. The buy-sell-hold choice we continuously make as investors is all about taking an informed and carefully thought-through decision. Is the investment still good enough? Is there enough room for gains in the future? Is it worth investing more? What is the logic for holding on and not selling? And so on.

The new trinity of BAAP-SAAP-HODL has no time for thought. Just do it at any price, no matter what. Do not indulge in any old-fashioned activity like analysis or even thinking. The most important part of the new paradigm is that you must not bother about the price you pay for the investment. To anyone who has actually been investing for a long time and has gone through the whole cycle of making bad investments, good investments and then gaining some real perspective, this is a bizarre belief. People often get so excited in real-life investing that they ignore the price. We've all done it at some point. However, we know that it's a mistake. It should not be done. Elevating this idea of ignoring price to an actual principle of investing is perverse.

Investing is entirely - and I do mean entirely - about buying things and later selling them at a point when they are worth more. After all the evaluation and analysis is done to select an investment, one must finally consider if the price is one that will lead to gains in the future. There's an idea around that if you focus on the price of an investment, then that's 'value investing', which has now been declared dead in this age of growth and valuations. That's very far from the truth. As Charlie Munger once said, "All good investing is value investing." The simplest yet most comprehensive definition of value investing is buying something for less than its intrinsic worth. If you want to make money, that is the way.

This focus on BAAP-SAAP-HODL is puzzling if you see it within this framework. However, I think the reasons for all this are rather different. One, the crypto world has long justified idiotic investments with a kind of ideological underpinning. People create fraudulent 'currencies' without any basis in reality and then justify selling them because of some 'future of money' nonsense they invent. It's just a sales pitch, a way of transferring other people's money into your own pockets. This culture of investing without bothering about price or any fundamentals is also promoted for the new age 'digital' companies because they too are in the same boat - stock prices have to be somehow justified without any sign of profitability.

It has all worked well for those selling worthless securities but not so much for those who bought into the stories. Don't fall for these ideas - nothing is worth 'at any price'.

Suggested read: Panic defeats excitement