Meme stocks are on the rise, but here’s how I’m investing…

And yet here I stand before you as an investing Luddite. Why? As much as I like to think of myself as someone with sophisticated investing skills, I am using the same hardware as my ancient ancestors, and I cannot deny the truth that our brains are not adapted to this exciting investing environment.

To illustrate this, let’s look at what I might face if meme stocks rise.

The ups and downs of being a meme stock investor

As soon as I picked up my phone, I opened Reddit and discovered that other people were eager to buy the product. Today’s StockI see stories of people who previously invested in that stock and made a fortune, then I look up the current stock price and watch it skyrocket — suddenly, I’m hooked, and after a few taps on my phone, I find myself the (not-so-)proud owner of a meme stock.

Cognitive biases (misleading mental shortcuts) have led me to quickly make investment decisions that I didn’t really want to make.

First, I saw that everyone else was excited and it intrigued me. This tendency to go along with the crowd is called herding behavior.

Also, I had seen a lot of good news about this stock (both anecdotally and through its stock price history), so the availability heuristic allowed me to project its recent success onto my own future.

In the end, I fell prey to the action bias that tells me I need to “do something” in the moment of excitement, or I might regret it.

There’s a reason our brains work this way: being able to make quick decisions with little information was beneficial for our ancestors. But when it comes to investing, making quick decisions with little information can lead to mistakes, especially when you’re empowered to invest large amounts of money with little effort.

A better way to invest

That’s why I like to think back to the Stone Age when I invest. Not that I want to shy away from Wi-Fi or electricity, but there’s a lot we can learn from that time about executing long-term plans. So once I’ve decided on a financial plan, I like to think back to the Stone Age to help me stick to it and achieve my financial goals.

I don’t read market news every day. Knowledge is power, but too much knowledge can distract from long-term planning. In the Stone Age, news took a long time to reach you, so only the important information eventually got through. Nowadays, it’s harder to discern the important information from the deluge. By limiting the market media I consume, I do the same thing: I avoid the noisy daily ups and downs and focus on the bigger picture. This means that you might not even notice something happening, like a meme stock rising, until much later.

I am skeptical of strangers’ stories. It’s too easy to lie online and even easier to forget about it. We connect with strangers like never before, and we can feel connected to people we’ve never spoken to. But historically, it was rare to interact with strangers, and even rarer to immediately believe their words. That’s why I am skeptical of other people’s stories of investment success. It helps me see things differently. Even if what they say is true, I don’t need to replicate their success by investing like them. That way, I can focus on my own plans, not theirs.

I take things slowly. I love convenience as much as anyone, but sometimes you need a little friction. If I was trying to change my plans in the Stone Age, it wouldn’t have been as easy as a few taps on my phone while lying on the couch. When something gets hard or takes time, I have time to think through and consider what I really want to do. For me, this means that by not making changes to my investments on my phone, I can at least give myself the space to think about whether I really want to change my investments.

The cognitive biases we face when investing today have been with humanity for thousands of years and aren’t going away anytime soon, but by understanding how to create our own tools to counter them, we can still invest successfully and achieve our financial goals.