On May 22, the price of Bitcoin briefly eclipsed $110,000—a fresh all-time high that lit the fuse for what came next. On May 23, BlackRock’s Bitcoin ETF saw one of its biggest days of trading volume ever, according to Eric Balchunas of Bloomberg. Volumes surged across all the major BTC ETFs—many to twice their average. Then, on May 24 and in the days that followed, the price of Bitcoin fell back below $110,000.
I have no price target for Bitcoin. In fact, this isn’t really about Bitcoin at all—it’s about human nature. And human nature remains undefeated.
When was the last time BlackRock’s Bitcoin ETF saw a day of volume/inflows like that? You may already see the pattern. It was January 23—the day after Bitcoin’s previous all-time high. 22, 23, 24…ATH, buying frenzy, price drop. Four months apart, nearly identical sequence.
To be clear, I’m not suggesting that all asset values follow the laws of physics—that what goes up must come down. Quite the opposite. In the stock market, I expect we’ll hit new all-time highs with some regularity. But what this pattern does suggest is that many investors base their buy and sell decisions strictly on past performance. And that’s about the most reliable way to join the ever-growing club of “investor returns < investment returns.”
The Manager Merry-Go-Round
Some might incorrectly assume that investors, who are hopefully forward-looking, will flock to what’s cheap and unloved. But that’s rarely true. Over the last decade, the narrative of American exceptionalism has dominated. “If I’m looking for the best returns, why own anything outside of the Nasdaq 100 or S&P 500?” I heard this up until about a month ago. Go figure, as of June 2, 2025, international developed stocks are up ~19% year-to-date (MSCI EAFE Index), and suddenly overseas exposure is back in vogue.
The same story plays out with fund managers in what I call the manager merry-go-round. A manager outperforms, investors pour in, the fund swells in size…and performance often fades. Disappointed investors jump ship for a “better” manager with a “stronger” track record—and on and on we go. This behavior rarely produces better results than a buy-and-hold approach.
For emphasis—because many investors believe they’re the exception—this behavior almost never works. DALBAR studies, Morningstar’s “Mind the Gap” reports, SPIVA scorecards…they all paint the same picture: the average investor’s returns often trail the very investments they hold. Why? Because they forget the “hold” part. They add a third, fourth, and fifth step—adjusting, bailing, tinkering—that feels good psychologically but is devastating financially.
“Don’t Just Do Something, Sit There”
From our core investment beliefs at Root flow a few second-order principles that shape how we put portfolios into practice:
- The primary driver for investment selection will not be past performance
- We believe the biggest threat to long-term returns isn’t the market—it’s the impulse to react to it
- We know there will always be winners and losers in our clients’ portfolios because diversification means never having all your money in what’s going up most right now—and thank goodness for that
Change is the only constant we can count on in markets. Leadership will shift, cycles will turn, but what stays the same is the remarkably predictable way investors react. The details vary. The emotions don’t. That’s why discipline—not timing—can provide a real edge.
CONSIDER
The Illusion of Choice – Nick Saban
“The fact of the matter is, if you want to be good, you really don’t have a lot of choices, because it takes what it takes. You have to do what you have to do to be successful.”
More often than not in life, you get out what you put in.
Sure, there are plenty of ways to be more efficient, but if you want to be a better writer, you should read and write frequently. If you want to be a better basketball player, you have to dribble and shoot and play basketball regularly. If you want to get better at public speaking, then speak in front of people. If you want to be a better mother, you must spend time actively engaging with your kids. If you want to feel better and more energized, then eat food that fuels your body, instead of hindering it. Garbage in, garbage out. You get out what you put in.
–
Let’s get after it this week!
Brooks
Brooks Palmer, CFP® is Head of Investments at Root where he helps identify, evaluate, and implement investment solutions tailored to clients’ needs. In Full-Court Press, he breaks down what’s happening in the markets—cutting through the noise and jargon—while connecting it to Root’s core investment tenets so you can make the most of your money and your life!
Advisory services are offered through Root Financial Partners, LLC, an SEC registered investment adviser. This content is intended for informational and educational purposes only and should not be construed as personalized investment advice or a recommendation to buy or sell any security. Any forward-looking statements, including expectations about market returns, are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future performance. Past performance is not indicative of future results.
