The term "midcurving" in investing comes from the idea of the Dunning-Kruger effect, which describes how people with limited knowledge often overestimate their expertise, while true experts and experienced investors recognize the complexity of a subject. In investing, this manifests as a learning curve and is a useful concept which highlights the dangers of overconfidence and emotional decision making.
It goes a long way towards explaining why good investing can be "simple but not easy" and why overcomplication and overtrading can hurt your long term wealth accumulation.
Left side of the curve (newbies): Beginners who lack experience and often follow hype or simplistic strategies.
Mid curve (intermediates): Investors who have gained some knowledge but may overcomplicate things, rejecting simple, effective strategies in favor of complex theories.
Right side of the curve (experts): Seasoned investors who understand that simplicity and fundamentals often outperform over-engineered strategies.
Application in Stocks & Crypto
In stocks, midcurving might involve overanalyzing technical indicators while ignoring basic principles like earnings growth or sector trends. In crypto, midcurving investors might dismiss Bitcoin and Ethereum as "too obvious" and chase obscure altcoins or complex DeFi strategies.
Examples:
Newbies (Left side of the curve)
Stocks: Buying meme stocks like GameStop or AMC based purely on social media hype.
Crypto: Investing in a new token because it has a flashy website and promises "1000x gains."
Intermediates (Mid curve)
Stocks: Overcomplicating portfolio construction with excessive options trading or chasing low-liquidity microcaps.
Crypto: Dismissing Bitcoin and Ethereum as "old tech" and focusing only on complex yield farming strategies.
Experts (Right side of the curve)
Stocks: Sticking to time-tested strategies like diversified ETFs, strong balance sheets, and sector rotation.
Crypto: Holding Bitcoin and Ethereum as core assets while selectively engaging in high-yield staking or venture investments.
The key takeaway? Sometimes, the simplest strategies are the best. Midcurving investors often reject them in favor of excess complexity, only to later realize that fundamentals matter most. Does this align with your investing experience, portfolio construction and most importantly, how often you second quess yourself and move in and out of well-researched long term winners?
At Maendel Wealth we work with smart, busy individuals, families and business owners who value having a financial "quarterback" collaborating with them to build and preserve long-term wealth, while minimizing taxes, expenses and other drags on portfolio performance.
You don't have to go it alone!
In fact, we believe so strongly in a multi-disciplinary approach combining fundamental, technical and behavioral analysis that we have a full time BFA on our team.
Jim Maendel is a credentialed Behavioral Financial Advisorthrough Kaplan University, and believes that these tools and disciplines are critical to clients success as they help fill in the gaps in traditional financial planning advice.
- "Financial planning was a big advance 20 or 25 years ago. Behavioral financial advice is at least as big. It is that revolutionary". -Think2Perform
Learn more: What is a Behavioral Financial Advisor (BFA)?