As Chad puts it: "I see a stock going up and I buy it. And I just watch it until it stops going up, and then I sell it. And I do that over and over, and it pays for our whole lifestyle." He goes on to say he turned $400 into $14,000 in one month and, in another month, less than $1,000 into $20,000.

When another TikTokker asks what to look for, Chad says in the comments: "up is good. down is bad. I just ride the upward trends and when they start going down jump off lol."

To be fair, a lot of professional fund managers do something superficially similar when they follow a momentum strategy, which buys whatever's hot and sells whatever's not.

But professionals have training and experience and technology to help them succeed — and, even so, momentum funds have had spotty performance. Investment firm Research Affiliates found that a sample of six momentum mutual funds from 1990 to 2016 underperformed the market by an average of 2.6 percentage points annually.

Can amateurs who know nothing whatsoever about a stock except that it's been going up do better than the pros?

Sure they can — for a while, anyway. In a bull market, lots of stocks go up. You can probably find a few even if you have no clue what you're doing.

As the old saying goes, even a blind squirrel can find an acorn once in a while.

Back in 1929, the humorist Will Rogers, whose folksy, syndicated column sometimes appeared in the form of mock letters to the editor, wrote that investors should shrug off the recent stock-market crash. He'd fit right in on TikTok, although he was kidding when he said: 

"Take all your savings and buy some good stock, and hold it till it goes up, then sell it. If it don't go up, don't buy it."

In the late 1920s, trading stocks — often with borrowed money and without doing any research — became a national obsession.

Janitors and maids, taxi drivers and chauffeurs, doormen, policemen and factory workers, all flocked to the stock market looking to get rich quick, as this cartoon by Rollin Kirby shows. It ran in the inaugural issue of BusinessWeek magazine (then called The Business Week) less than eight weeks before the Crash of 1929:

A few years later, the great investment analyst Benjamin Graham described the mentality — it doesn't matter what you pay for a stock, so long as it's going up — that made this mania possible:

The same mania struck in 1999 and early 2000, when a barber could become a near-millionaire by trading technology stocks and online brokers ran ads featuring a pajama-clad mom flipping stocks and a tow-truck driver who bought a tropical island with his trading gains. The barber, and millions like him, soon took a brutal haircut between 2000 and 2002, when the internet-stock bubble burst.

Investing can be simple, but it isn't easy. It isn't a mindless joyride. It is a process, not a game; you win by persisting over the course of many years, not by racking up the most points in the least amount of time.

In my very first Wall Street Journal column, back in July 2008, I wrote:

[As Warren Buffett has] pointed out, investing is much like dieting: It is simple, but not easy. Everyone knows what it takes to lose weight. (Eat less, exercise more.) Nothing could be simpler, but few things are harder in a world full of chocolate cake and Cheetos.

Likewise, investing is simple: Diversify, buy and hold, keep costs low. But simple isn't easy in a market seething with "free" online trades, funds that promise to transform losses into gains, and TV pundits who shriek out trading advice as if their underpants were on fire. The real secret to being, or becoming, an intelligent investor is bolstering your self-control.

That's harder than ever after almost a year of quarantine has us all climbing the walls and seething with cabin fever. As I wrote in my column last week, being cooped up has led many investors to conclude that they can perceive which themes, or broad trends, are likely to dominate the market for years to come. That can make it harder to remember that other investors may have spotted the same themes even earlier, driving prices dangerously high.

You should keep your investing simple. But you should never let anybody fool you into thinking that investing is easy.

Be well and invest well,

Jason

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Here are some of the best things I found over the past week outside The Wall Street Journal:

• The stock market is getting top-heavy, with more weight in the biggest S&P 500 stocks than in the past 40 years, says blogger Lawrence Hamtil
• The Novel Investor blog has a thoughtful summary of which assets, worldwide, generated the best and worst returns in 2020
• Nobel prize-winning economist Robert Shiller talks about market narratives on Consuelo Mack's WealthTrack (video)
• A study of SPACs by several academic researchers finds that costs are higher, and returns lower, than many investors seem to believe
• People who have lost their bitcoin passwords have millions of regrets, the New York Times shows
• The liar-for-hire business is booming, reports the Financial Times, as firms cash in on spreading political disinformation (h/t @ashthaker1)
• Stimulation of a dopamine center in the brain, neuroscientists show, can induce happiness — perhaps too much (h/t @knutson_brain)

Here are some of the best things I found recently in The Wall Street Journal:

• Speculators have driven stocks up this year based not on value but on price, James Mackintosh shows
• Hedge-fund operator Renaissance Technologies tells investors that its poor returns in 2020 were no big deal, reports Greg Zuckerman 
• Your 2020 tax returns could get snagged by such complexities as stimulus payments and working remotely, warns Rich Rubin
• The pet craze has room to run, but investors shouldn't shouldn't beg to participate, say Carol Ryan and Jinjoo Lee
• Joanna Stern offers some greater pointers on how to keep social media from poisoning your mind with political and other nonsense
• The death rate from cancer fell by the largest margin on record (based on data through 2018), reports Brianna Abbott
• Randomized control experiments can help alleviate poverty, says global economist Annie Duflo in this interview

Have a question you'd like me to answer? Want to weigh in on what you just read? Got a tip on something that I or my colleagues should investigate? Itching to tell me I'm wrong about something?

The mailbag is pretty empty this week, so I'm patiently waiting to hear from you. Just reply to this email and I'll see your note. Don't forget to include your name and address.

Last week's newsletter erroneously repeated a passage almost verbatim. The correct version should have included only this paragraph:

Now imagine that it's Jan. 5, 2021, and you have a magic crystal ball. It tells you: Supporters of President Trump will invade the U.S. Capitol the next day to try preventing Congress from certifying the presidential election results; a police officer and rioter would be killed and three others would die of medical emergencies; and the House of Representatives will end up seeking to impeach the president for "incitement of insurrection."

I apologize for any confusion.

The happiness of those who want to be popular depends on others; the happiness of those who seek pleasure fluctuates with moods outside their control; but the happiness of the wise grows out of their own free acts.

— Marcus Aurelius