Peloton stock peaked on December 21, 2020. On that day, the New York Times reported discovery of a new COVID-19 variant (the Delta variant) and we were six months into the pandemic.
What’s going on at that moment, one when people whose JOB it is to value stocks decide that PTON is worth $162 / share?
While the stock market is highly complex, at its essence this chart encapsulates a basic flaw in human reasoning: the mistaken conclusion that what we’re experiencing today is going to last forever.
What else could explain a stock increasing its aggressive valuation 6-fold in just 6 months’ time? Or, in retrospect, a price that was nearly 50 times its present value?
It is human to confuse “now” with “forever.” This applies to politics (“gas costs more today, I’m going to vote that guy out of office”), climate change (1 in 5 people globally consider it a minor threat), or how we feel on day 5 of a cold.
This tendency of ours strengthens when we encounter challenging conditions: in the midst of a crisis, a hard period at work, or even when we are just feeling stuck, it can be difficult to convince ourselves that this too shall pass.
Figuring out whether you are in a Dip or if it’s something permanent is a skill, to be sure.
But, most of the time, especially with our day to day, now is just now.
It might be great, it might be terrible.
But one thing it is not is “forever.”
