By now, I hope I have made it clear that I like to approach my investments holistically.
Meaning, I do not blindly accept the word of experts, nor do I confirm my biases by only reading information from sources that tend to sway one way over the other. I also allow myself the flexibility and freedom to change my mind should the facts change about any specific investment.
As I have previously written, my approach to gathering information includes reading, reading, and finally, more reading. Reading is the single most powerful way to educate yourself. I listen to several interviews and podcasts, I read blogs, I follow technical commentary on forums, and I expose myself to as many aspects of an investment as possible before I decide to execute a trade.
This is my “working through the weeds” legwork of an investment. These are the finer details that are aimed at answering the classic questions of what is my risk/reward setup, what is my end goal for this investment, what is my contingency plan should I be wrong, what is my timeline for holding, what sorts of events/volatility am I willing to hold through, and what sort of things would have to arise for me to exit the position.
However, there are much more important pieces to the puzzle that I find many investors miss in their analysis. So far, all that my research has included is digesting the opinion and analysis of others. Sure, several of these individuals that I read and listen to are likely smarter than I am in their respective fields.
Yet, when it comes to connecting the dots, plotting a course of action, and carrying through on that action me, myself, and I is the most qualified individual to make decisions as they relate to my money. Same goes for you.
While we can rely on others for gathering information, information alone is not actionable; information alone is not enough to make an intelligent decision. We must turn this information into something more useful: actionable wisdom.
In this information age, I witness countless people mistaking information for wisdom. I find that many are quick to react to the latest tip. They respond to the latest price action as a confirmation that something is about to “blow a top” and take off “to the moon”. Here on Steemit alone, I see many investing in cryptocurrency in this exact fashion.
Now, I realize that some understand the space and all that comes with it. Meaning, they understand the risks involved with investing in such a nascent marketplace, and as such, they are properly allocating small amounts of capital to these highly speculative positons.
Yet, I am now seeing some truly disconcerting signs that people are “betting the farm”. People are overextending themselves via loans, liquidating physical assets in order to raise capital, and they are willing to extend themselves via margin on various exchanges. They are also losing patience, and abandoning limit orders in place of market orders, essentially chasing the market price higher. I suspect these sorts of individuals are the ones who will be easily shaken from their positions, and I suspect the so-called “whales” in the space will be the ones who shake these people from their positions.
The whale (aka experienced investor) will be able to buy this overextended money for a nice discount at some point in the future, when any sort of noticeable price decline will cause those overextended to sell out of fear. This is normal in any market, but judging by the current quality of money coming into the space and the rate at which it’s entering the market, I see smart money patiently waiting on the sidelines and waiting for the trees to develop low-hanging fruit.
I mean, seriously, just read through some of the comments here on a Steemit post or a Coindesk.com article. Any Tom, Dick, or Harry could write an article on “Why to Buy (____)” and odds are you will see real people commenting that they are entering real positions based on this information. Market seems a bit frothy, wouldn’t you say?
I like my investments like I do my beer, without excessive froth. Now, I will not speculate on any sort of timelines or any sort of price predictions, but I will say that the price of bitcoin responding as it has in the past several weeks (up to $4000 from $1800 as of this writing) it sure seems to me the market is pricing in the best-case scenario.
This scenario likely prices in the value of larger block sizes, lightning network, and any other number of field-specific computer engineering items that are truly too technical for one to digest without any sort of background in computer science. That is not to say that you should not attempt to do so in the comments!
I, like everyone else in the crypto community, have my own opinion on how things will play out (and I usually do not share my opinions unless I am around intelligent people). That said, I am bullish on the long-term picture for cryptocurrencies. However, I have yet to read anything that truly explains why I am bullish on cryptos.
So, in my coming posts I will be digging deeper into the world of crypto and I will attempt to structure my thoughts in a way that is clear, logical, easy enough for anyone to follow, and ultimately open-ended enough for you to develop your own working thesis on the space.
Unlike several of the of the other Steemit posters I have been exposed to, I am not inclined to engage in commentary about hard forks, scaling, this v. that, them v. us, crypto v. the world, etc. type views. I like to think that I focus on larger, ubiquitous, unstoppable trends and how human nature and politics will inevitably pry themselves into the picture.
Some of the overarching questions I will attempt to answer include:
- Is the crypto market really in a bubble, and if/when will it burst?
- Is the crypto market driven by return on investment, or marketing?
- How will institutional money enter the space and what will that look like?
- Is Bitcoin the de facto reserve currency, or is it gradually being undermined?
- Can we still make boat loads of money in this space, or are we too late to the party?
Before reading my coming posts on cryptocurrency, I hope that you will revisit my previous posts to better understand my philosophy towards investing, and to better understand my tone of voice so that I can communicate my thoughts to you more clearly.
It is my hope that anyone reading this will engage in the comments section. I will not pretend to know how the future will play out. The truth of the matter is that nobody does, nor will they ever. It is quite a liberating moment when you realize the investment playing fields are level, and so long as you are reading while asking the right questions you are as well-prepared as anyone to position yourself for substantial monetary gains.
"Information is not knowledge. The only source of knowledge is experience." -- Albert Einstein
DISCLAIMER : This content is for informational, educational and research purposes only. This post is not to be taken as personalized investment advice.