Invest. Don't Believe.

In the 1991 classic Hook, we root for Robin Williams, who plays an old Peter Pan, to shed the hardened corporate shell of his adulthood and regain the innocence of his youth. And while believing in fairies and thinking happy thoughts may help you fly and defeat Captain Hook in Neverland, such nonsense has no place in investing.

Sam Bankman-Fried, or SBF as he is commonly known, is the Tinker Bell of the FTX collapse, convincing all his Peter Pan-like investors to believe in his magic. They flew high for a while, but when the fairy dust settled, FTX was in bankruptcy and SBF was indicted for fraud.

Despite the bankruptcy and fraud. I think there’s a bigger lesson to learn than just the importance of basic due diligence (FTX had a hole in its balance sheet the size of the Grand Canyon). That lesson is the importance of detachment from emotion when making investment decisions.

You don’t invest in a stock because you “believe” in the company founder or “love” its corporate mission—you invest in a stock because you think it will make money. The internet, especially Twitter, is dominated by very charismatic people, like SBF, whose followers become evangelists, spreading their leader’s word as gospel.

SBF became the quirky but all-knowing face of crypto, even appearing before Congress and bailing out crypto lender BlockFi just months before FTX’s collapse. The public was enamored with his confidence and intellect, which allowed him to attract investors from across the spectrum–from the smallest retail trader to venture capitalist heavyweights, including Sequoia Capital and BlackRock.

Everyone got duped because they simply “believed” in SBF and FTX without properly evaluating them like any investment should be. FTX was sexy and dominated the zeitgeist, so investors were quick to overlook important but boring things like audited financial statements and internal controls.

But sexy and profitable aren’t synonymous, a lesson I actually learned in 11th grade English class. We had to interview someone we admired and write a short biography, so I chose an entrepreneurial family friend. He told me, “I would run a business shoveling pig slop if I thought it would make money.” Not sexy but profitable.

Good investments stand on their own merits—not belief in a charismatic leader. Apple has done just fine after the death of Steve Jobs. His successor, Tim Cook, while not nearly as animated and passionate as Jobs, has successfully led Apple to continued growth and profitability. It’s about fundamentals–not charisma.

Josh Norris is an Investment Advisory Representative of LeFleur Financial. Josh can be reached at josh@LeFleurFinancial.com.

Josh Norris, CPA, CFP, CFA is the managing member of LeFleur Financial, a wealth management and tax advisory firm.