Ring the Bell

By Mike Dever and Matt Dever

In late 1999, I received a call from a long-time Brandywine investor. After 15 years with us, he was preparing to retire and asked to redeem his account. His investment had grown tremendously; more than enough to contribute towards a comfortable retirement at the time. I thanked him for his trust, congratulated him, and asked, “How do you plan to invest the money now?”

“I just want to earn a safe 20% return,” he responded.

His answer made me laugh - instinctively, not mockingly.

After a brief pause, I realized he wasn’t joking.

He had been seduced, there’s no other word for it, by an advisor who told him he could reliably earn 20% annually with limited risk. Recent market activity appeared to confirm this belief. Over the prior five years, both the S&P 500 and NASDAQ had compounded at 20% and 30%+ annualized, with no down years. A handful of high-flyers gained over 1,000%, creating vacation homes, early retirements, and a tidal wave of unrealistic expectations.

Brandywine had also delivered strong results during that period, but that wasn’t enough. As stocks like Cisco and Qualcomm accelerated at triple-digit annual rates, even matching the returns of Warren Buffett no longer counted as success. To be viewed as competent, you had to compete with the returns of the most explosive stocks in the most explosive market of the century.

That was 1999. What proceeded was a 40% drop in the S&P500 over the subsequent two years.

There is a long-time market adage, “The market never rings a bell at the top.”

But it rang then, and today, we’re hearing the same bell ring.

FOMO vs. FOLO: The Modern Investor’s Blind Spot

In the last month, we’ve spoken with numerous investors who are far more afraid of missing out than of losing money - more FOMO (fear of missing out) than FOLO (fear of losing out). One investor last month told us outright they “needed to earn 20%.” Interestingly, the exact same figure I had heard 25 years before. Almost simultaneously, another caller practically panicked that they weren’t capturing enough upside.

Like my 1999 investor, many are being misled: Sometimes by the press, sometimes by advisors who fear losing client assets and sometimes simply by recent returns. Once again, there is a collective amnesia surrounding Warren Buffett’s basic wisdom:“The first rule of investment is: don’t lose money. The second rule is: don’t forget the first rule.”

Shoeshine Boy Redux

Joe Kennedy famously recounted that he knew it was time to sell in 1929 when a shoeshine boy began pitching him stocks.

Two weeks ago, my son Matthew and I grabbed dinner after a day of investor meetings in Denver. Our busboy, on finding out what business we were in, began to pitch us on an exchange trade fund (ETF) designed to track the performance of companies in the nuclear fuel and energy industry. Although he confused nuclear power with nuclear weapons, he proudly told us he was up more than 40% since April and strongly recommended we “get in now”.

Anecdotes don’t constitute data, but they help identify sentiment extremes. And today, hard data backs them up.

A Market Priced by FOMO

Some of today’s mature companies, even those with declining sales, trade at 200+ earnings. Circular financing is back. Private equity is pouring money into artificial intelligence (AI), data centers, energy, and fintech at a record pace. Valuation metrics across the board are stretched.

I hear bells.

Most people disagree and the rationalizations are familiar:

·       This time is different.

·       Valuations don’t matter as the opportunities are unprecedented.

·       It’s not as extreme as 2000.

But a bubble does not need to exceed the all-time biggest bubble in history to be a bubble.

If You’re Still Reading, You’re Already Ahead

Fewer than 5% of recipients will read this far.Why does that matter?Because the people who stop reading are those who disagree with what we’re writing. They are most likely to be dominated by FOMO. They react emotionally and jump into markets late. They are the ones who buy high and sell low. This is not just conjecture. It is backed up by data.

In my 2011 best-seller, “Jackass Investing: Don’t do it, Profit From It,” I showed evidence that the average investor underperforms the very funds they invest in by as much as 5% per year. Even when the fund performs, the investor doesn’t.

Rational, disciplined investors capture that difference.Those driven by emotion donate it.

What this means for Your Portfolio

I’m not saying you should sell everything. Market timing rarely works.

But it is always the right time to invest with protection, either through direct downside protection or truly diversified strategies. FOMO is not a strategy. It is a tax that gets paid by emotional people to rational investors.

We don’t pretend to know the right time to sell stocks. No one does. But protecting capital— mathematically, behaviorally, and structurally — is always the winning long-term strategy. As is having strategies with return drivers that perform well in periods of stress for stock market and the broader economy.

The 1999 Investor: What Happened Next?

Back to the investor who demanded a “safe 20%.”

His initial investment had grown impressively over 15 years. Two years after redeeming he asked if he could come back and reinvest; sadly, with less than half of what he had exited with. He said the biggest mistake he ever made was taking that money away, his wife recounted.

As someone who has traded across six decades, I’ve made more mistakes than I care to count, but mistakes only have value if they prevent future mistakes.

If FOMO has value, it should involve fear of missing what happens next, not fear of missing a boat that already has sailed.

Michael Dever is the founder and CEO of Brandywine Asset Management. Mike is a best-selling investment author and featured subject in multiple books. The founder of Spree.com and InternetSeer.com, two early internet pioneers - one later acquired by Landmark Communications.

Matthew Dever is the head of advisor solutions at Brandywine, leading firmwide growth initiatives and operational strategy. Prior to Brandywine, Matt was founder and Co-CEO of Scrimmage, which was acquired in 2025 and a credit analyst at Citigroup.

Past performance is not indicative of future results.

CTAEXPO welcomes the submission of new or reprinted educational material.  This material was provided and prepared by Brandywine Asset Management and is published to provide educational information and background to financial industry professionals and sophisticated investors. CTAEXPO does not endorse or recommend the author’s services.