Cool thinking about investing
Keep in mind, most investors are not experienced.. Every day new people of all ages invest in crypto currency from all over the world. I am hoping this helps not just new investors, but existing investors who may be over-diversified. During a rush as we are seeing now in crypto currency, a lot of people are throwing money into anything they know and anything that moves. When you get too close to something, you will take anything you read or see for granted. The more confident you become the less likely you are to probe an asset (or stock) for weaknesses. As Benjamin Graham says "The more familiar a stock is, the more likely it is to turn a defensive investor into a lazy one who thinks there is no need to do any homework." Don't let that happen to you! A massive bubble is building and this bubble may take 2, 3 maybe 5 years to burst, but it will happen. If we look into what history has taught us, we know that during the late 1990's technology stocks were booming.. They were also getting massive 25-100%+ days after days. But what happened? The worst stock market crash since the great depression happened with stocks loosing 50% of their value. It get's worse, dot-com and telecom stocks lost 95% of their value by the end of 2002. Of course this affected even the biggest names like 'AOL, Cisco, and Qualcomm'. Accusations of financial fraud, allegations and charges on top executives caused disarray leading many companies into bankruptcy. Keep in mind, assets become more risky the higher the price climbs, and less risky as the prices fall. Benjamin Graham knew this best saying "By the time everyone decides that a given industry is "obviously" the best one to invest in, the prices have been bid up so high that its future returns have nowhere to go but down." When prices become too high, we reach a point where no asset seems "low enough". In this case, the Crypto Big Bubble will burst.. Everyone would be in a panic dumping anything that they feel is garbage.. Depleting most coins to a market cap of nearly $0. (Which they should have never invested in) But by then it would be too late for most. 95% of all these assets will have failed leaving the rest of the surviving assets at all time lows due to panic and overvaluation. First, let me say you must research every single thing you invest in. If you can't understand it, don't invest in it! Do not invest in anything unless you feel it can survive a "worst case scenario". Only AFTER you have done extensive research, should you invest. Here is an example why... Let's take a look at someone who invested into "anything" that moves... For example 'Joe' on Poloniex buys a little of everything, and starts bragging about how 'easy' money he is making, he is just a winner in his eyes, etc... Let's compare this to Jane who says "Im going to research, be very selective and ride out the lows and highs of companies I am confident in." So if you have 2 different investment strategies, which would you choose and why? When the bubble bursts, (and it will) both Joe and Jane are going to be in tough times.. Assets will have lost tremendous value, putting them both at a low.. So what now? Well once you reach a low, the market will start to recover and swing upwards... The difference is Joe is sitting on many useless assets that 'never' recovered, either ended up de-listed or a market cap that was completely drained. Jane on the other hand, is sitting on many recovering assets, minimizing her loss because she researched to make the best decisions. (Even then it may take years for a recovery) If you are not confident in something, you should not invest. Indecisive decisions will lead you to sell during lows and buy during highs. When if you were to ride out the lows (or buy during a low) , you will be dramatically more ahead when a big bubble crash does recover. If you truly understand the company your investing in, you will know if it is undervalued or overvalued based on your own research. An investor calculates what an asset is worth based on the value of the business. If you don't know the business, you cant give it an evaluation. That being said, nobody can predict the market. Every investment is a risk, but one you should be confident in taking. In the long-term it was the research and knowledge that paid off. Remember, the most important investment you can make is in yourself. The more you research, the more likely you are to make intelligent decisions and survive the 'Worst Case Scenario'. Regards, BTC2018