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It’s officially summer, and that means hot sunny days, long lines, and crowds. And my all-time favorite, ice cream! Anyone who knows me knows how much I love ice cream. It’s my personal kryptonite. I recently returned from a cycling vacation in beautiful Croatia, chock-full of challenging climbs in hot and humid weather with breathtaking (no pun intended) views of the sapphire-hued Adriatic Sea. After a hard day of cycling, nothing tastes better than a delicious scoop of gelato. 

If you’ve visited Croatia, you’ll know that gelato shops are around every corner, like Starbucks in Manhattan. Yet people (aka tourists) will wait in line under a blazing hot sun at certain shops, when there’s another one half a block down with zero wait. Why? Because the one with the crowds has been publicized in guidebooks and review sites as the best; has a beautifully melodic name ending in “liana” or “amore” that rolls off the tongue; and promises artisanal, hand-crafted, exotic flavors. Long lines only affirm that it has to be good. But is it the best? That’s subjective, of course, but after enjoying an average of two gelatos a day at dozens of shops during my trip, I can tell you that there’s not much difference between (what’s claimed as) the best and the rest. And in some cases, what’s touted as the best only served up disappointment at a premium price. 

Classic tourist trap? In some cases, yes. Spotting traps and avoiding them is wise not only when you’re traveling, but in investing as well. 

It’s far too easy to get caught up in the tourist traps of investing: chasing what’s hot, fancy, and popular, and consequently overpaying. 

With the S&P 500 closing the first half of 2024 up 14.5%, the DJIA up 3.8%, and the NASDAQ up 18.1%, the fear of missed opportunities can run deep. This year’s most popular trades — meme stocks, bitcoin, and AI-fueled tech stocks — hit new highs last month, keeping them front and center in the headlines. The latest hot Wall Street idea? Trading zero-dated options. 

We usually advise our clients on what to do for successful investing in the long-term: things like having a well-diversified portfolio across different asset classes, keeping costs low, minimizing taxes through asset selection and location, and keeping a long-term view focused on financial goals. 

Equally important, however, is to understand what not to do and what traps you should avoid. 

So in celebration of summer, here are some common themes between tourist traps and investing traps (and what to steer clear of). 

Avoid the crowds.

There’s a delicious brunch place near where I live in San Francisco that’s listed as a must-visit breakfast spot in numerous travel sites and guidebooks. We used to wait 15–20 minutes for a table many years ago, but today, waits of 1–2 hours aren’t unheard of on the weekends. I have no doubt it still serves up delicious pancakes, but there’s a half a dozen places nearby that offer equally delicious (if not better) food and a more enjoyable and authentic experience, without the crowds, the wait, or jacked-up prices.  

Similarly, long-term investing isn’t a popularity contest. The investments that everyone is chasing can be overhyped and overpriced, with prices driven higher not so much by fundamentals but because more and more investors are piling in. We’ve seen it before; herd mentality can lead to bubbles, where prices become separated from value. 

Don’t miss the forest for the trees. 

In Croatia, we spent a day visiting Plitvice Lakes National Park, a stunning park of magnificent waterfalls and crystal-clear, turquoise lakes. Rather than savor the views, many visitors seemed rushed — keen on ticking off as many sites as humanly possible, elbowing through crowds, and wielding selfie sticks to get that Insta-worthy shot. What did they miss? The awe and power of the thunderous rush of water and inspiration radiating from jaw-dropping natural beauty. They say a picture’s worth a thousand words, but in this case, being present was worth more than a thousand pictures. 

When it comes to long-term investing, have an overall plan — a blueprint that helps you invest toward your goals but allows for flexibility as things change. Investing is a life-long journey, not a get-rich-quick scheme with constant detours chasing one hot investment after another. Take time to understand what you’re investing in and why, and to make decisions that are prudent and appropriate for you and your goals. 

Not all recommendations are created equal — make sure they’re right for you.

I recently worked with a travel agent to help me plan a trip to Portugal with my mom, who’ll turn 91 next month (yup, the apple doesn’t fall far from the tree). The most popular, highly recommended sites that would be must-sees for most travelers would not be enjoyable for my mom, who is visually impaired with limited mobility. Regardless of what’s highly recommended by others, we’ll be visiting sites that are personalized to her preferences and limitations so she can get the most out of her travel experience. 

Similarly, your investment portfolio should be specific to you, constructed and managed to accomplish your personal financial goals — not your best friend’s, not Warren Buffett’s, not your tech entrepreneur neighbor’s. Pay heed to who is making the recommendation and how that person’s financial situation and goals are similar to or different from yours. What someone else invests in or what they recommend may or may not be appropriate for you, regardless of how attractive it appears. 

No regrets. There’s always tomorrow.

No matter how carefully you plan your travel, there will always be places you didn’t get to visit, food you didn’t get to try, people you missed seeing, and experiences you wished you had. All of these “wish we had more time” things don’t diminish everything you did do and all of the experiences you enjoyed. They shouldn’t be regrets, just things that go on the list for next time.

In investing, there will always be missed opportunities. But if there’s anything I’ve learned from my decades in the industry, the landscape is always changing, and that dynamic creates a continuum of opportunities. Things we can’t even imagine today. Remember VCRs and DVDs, personal computers, the internet and dot-coms, iPhones, virtual reality, cloud computing, wearables, blockchain, and now AI (just to name a few)? Regret has no place in investing, because there will always be more opportunities on the horizon.

Happy summer and happy investing.

To learn more about Ellevest and how we help our clients build their wealth with a values-aligned investment strategy, you can schedule a call with us here.

Disclosures