Why Cool and Neato Investments Will Drain Your Portfolio

The $15 Billion Ring Nobody Wanted

I got an email a few months back from another Wall Street wizard of smart, pitching me on a hot IPO. I’m basically on the IPO blacklist at this point because we sell right away. We always sell right away, especially when we see things race to the roof. But that’s a story for another day.

Let’s talk about Oura Ring. If you haven’t heard of it, it’s a sleek little smart ring that tracks your sleep, your health metrics, all sorts of things. Cool? Sure. Neato? Absolutely. And that’s exactly the problem.

Oura was supposed to go public last month. It didn’t. The official story was jittery markets. The real story? They couldn’t find enough buyers at the price they wanted. The valuation they were pitching: $15 billion. They positioned themselves as a technology and data platform. Not a ring company. A technology and data platform. Worth $15 billion.

I’ve been doing this for 30 years. I know what that framing means. It means the underlying business can’t justify the number, so you dress it up in buzzwords and hope the market is distracted enough to bite.

The Pattern Goes Back Decades

This isn’t new. I watched the same movie play out in the 1990s. A young Goldman Sachs hotshot leaves the firm and starts a company delivering Blockbuster videos and Ben and Jerry’s ice cream to your door. You could even return your VHS tapes at Starbucks. Seriously. And this thing went public.

I looked at it and said, this will never make money. Not ever. But the environment didn’t care. You were new. You were different. You had a young CEO with Goldman on his resume. That was enough.

Then came Peloton. And look, I’ve used one. It’s fine. But let’s be honest about what it is. It is an exercise bike with an iPad attached to it. My grandmother had an exercise bike. We used to ride it as kids on Sunday afternoons until someone told us to stop making noise. The core product hasn’t changed. What changed was the story around it, and during COVID, with SPACs flying everywhere and CNBC cheerleading every ticker that moved, nobody wanted to hear that the emperor had no clothes.

What “Cool and Neato” Actually Costs You

Here is what I’ve learned about cool and neato investments:

• They get pitched hardest when markets are frothy and investors are least skeptical
• They rely on valuation frameworks that conveniently ignore profitability
• They attract the most media attention right before they collapse
• The people selling them to you have already locked in their fees and their exit
• By the time retail investors are invited in, the smart money is already looking for the door

The Oura Ring IPO falling apart is a gift of information. The market is starting to reject absurd valuations again. That is healthy. But there will be another shiny object next month, and the month after that.

The Lesson That Never Gets Old

The real reason investors lose money is not bad luck. It is not a crash nobody saw coming. It is the repeated, predictable, avoidable mistake of confusing novelty with value.

A product can be genuinely useful and still be a terrible investment at the wrong price. A company can have a great idea and still be structurally incapable of generating real returns. Excitement is not a financial metric. Neither is cultural relevance.

When I evaluate anything, I ask one question first: can this business make money, and is the price I’m being asked to pay reasonable given that reality? If the answer requires me to believe a story instead of read a balance sheet, I walk.

That discipline kept me off the dot-com wreckage. It kept me out of the SPAC disaster. And it is the same discipline that keeps me clear of $15 billion smart rings that couldn’t find a buyer.

Cool and neato is fun at a trade show. It is a wealth destroyer in your portfolio.