Whales got Lucky. It had nothing to do with their “hard work” or their “skills.”
There is only one statistically significant explanation for how and why the people who make money trading or “investing” over any short-term (i.e. less than 5 years holding—not “hodling” waiting for a “lambo” like the sweaty mid-life crisis pennystock traders or voice-cracking prepubescent cryptocurrency kids) succeed:
Luck.
Timing has nothing to do with it. Skill has nothing to do with it. Cup-handle shrugging doji baby has nothing to do with it.
It’s pure unadulterated luck.
Let’s be clear. This isn’t a loser’s lament. I have exactly as much money as I want and need to satisfy every desire I have in my life. As best I can tell, I’m wealthy.
Increasing the probability of becoming wealthy over time has two aspects.
One is a kind of mental conceptualization about what you do and don’t consider “wealthy,” which is more metaphysics and philosophy than real investment information. Let’s call that “pre-Investment knowledge” and leave it aside for this post.
The other aspect of increasing your probability of becoming wealthy over time is fairly straightforward:
Have a real, actually diversified portfolio, based on extensive research into the fundamentals, books, management, and track records of the company’s, instruments, substance underlying your investment, and then tinker with your portfolio as LITTLE as possible.
Of course, there’s no magic formula in the details to doing this right and you absolutely can still lose money even following this and/or all the best investment information out there.
But you can decrease your risk and increase your probability of growing your wealth (defining wealth as monetary assets of some kind), by taking whatever amount of money you have left over after paying all of your ongoing liabilities and needs each month, and putting—as a general rule—60% in equities, 30% in fixed income assets, and 10% in cash and cash equivalents. (Make sure to have a good diversification within those asset classes as well...mix up non-American with American equities, get corporate bonds, T-bonds, and municipal bonds, etc..., and then have some products like money market accounts, some savings, and some good old cash under the pillow).
Do extensive, deep, and broad research before investing in anything, and only invest in companies that have incredibly good books, track records, and fundamentals.
Don’t go in and out of your investments. Buy them and hold them for a nice long while. You can try maximizing your returns by occasionally buying and selling similar types of investments for others, if you’ve done a whole lot of research into fundamentals...but that almost always increases your probability of losing money.
Some people who enjoy the speculation game and trading (i.e. glorified slot machine players) will maybe change it up and go 60/30/5/5, with the last five being the amount you put aside for the crazy risky stuff (like cryptocurrency).
Some more conservative risk averse people like to do a 60/30/5/5 with the last 5 being specially set aside as real, physically held commodities (not stocks or certificates) like gold and silver.
Other people who have a certain perspective on things will do 60/30/5/5 with the last five actually representing regular charitable giving, but conceptualized as part of their pool of funds to invest.
More aggressive types will go 70/20/10, or 70/25/5, which can get you a bigger return but increases your risk.
None of these strategies, by the way, includes any significant amount of crypto or day-trading.
Because the people who have gotten rich doing those things got there based on luck.
The honest ones will admit that.
The dishonest ones will think that it’s mostly because they are so smart at investing/trading or such hard workers, or that they earned it in some way.
They didn’t.
They’ve just bought into their own survivorship bias and mythologized their recent past based on that.
Put more simply, they are kind of dumb and don’t understand simple mathematics, economics, or human psychology.
But they lucked into money and people with money have a way of deceiving themselves and everyone around them about their “skills” or “hard work” if they don’t feel like being honest with themselves or the world.
There’s not a single person (literally not one), who has made money trading (or “investing in”) cryptocurrency or daytrading by way of skill or hard-work.
They absolutely may have a lot skill and they may have applied that skill to their trading.
And they absolutely may have done a lot of hard work.
But those are not the reasons why they made the money they did.
The reason they made that mine was luck. Period.
They’ll argue up and down that this is not true. They KNOW how much work they put in and the skills they have! “Maybe it was luck for everyone ELSE,” they’ll say, “but I’m different because for ME it was hard work.”
People who luck into a lot of money after putting lots of effort and skill and time into some process of trying to get that money—not realizing that the effort, skill, and time was needless and had no statistically significant effect on their eventually received wealth—tend to be the biggest “snowflakes” of anyone.
Because they just can’t psychologically handle the fact that they don’t deserve that wealth anymore than anyone else...that they just happened to be lucky...that nothing about them or their hard-work is any better than anyone else’s.
They can’t handle the empirical fact that they are NOT special.
Which is why, you’ll notice, all the investment education in here that I’m giving you—it’s all geared towards helping you decrease your risk of losing money over the long term and increasing your probability of growing your money over the long term.
Because that’s the best anyone is going to be able to give you.
Everything else that claims to give you something “more” is snake oil and rubbish.
The Blubbersacks on here don’t like this one bit. (Thankfully they care as little about me as I care about them, so it all works out for me.) They’ll want to point to my wallet on here and say, “That guy doesn’t have any money so what does HE know.”
But remember two things. First, if someone has A LOT of money in their wallet on here, in order to assume that they are prudent, wise, and educated wealth managers/investors, you have to assume that they have WAY more money than what is shown on their wallet here. Because if they have put hundreds of thousands of dollars into one, single, cryptocurrency, and that represents more than a very small percentage (supermax 5%) of their investment portfolio, then that person is acting more akin to a Las Vegas roulette player than an educated investor.
And if that person has both a large amount in their Steemit wallet which only represents less than 5% of their total investment portfolio, then that person may actually be a well-educated investor and wealth manager.
Which means, at that point, ask them about the information given here. They’ll tell you it’s true. They won’t want to admit about the luck part. But they’ll tell you the rest is sound. And if I’m giving you sound information on that part, why would I just make up the part about the luck?
The answer is, I’m not making any of it up. These are all facts. The people who try to tell you differently have an inability to maturely handle the knock against their very sensitive egos.
It’s All Luck.
So just do what you can to minimize risk of loss and increase probability of growth over a long time horizon
Don’t let a group of lucky people and survivorship
bias trick you into making bad decisions about the money you actually earned through your daily labor and real work.
I’m not going to give some ritualistic disclaimer about this not being investment advice, because those things are not the magical formula people pretend they are. I know you all know that this isn’t any kind of official investment advice. I know you know that when I said not to do anything before doing extensive research, you’re aware that I mean that. If you were going to do is read this and then make investment decisions all in the same day (or even the same month), I would tell you to just please, go speak to someone, because you’re making insane decisions and haven’t understood anything I’ve said. Don’t do anything based on what I said here. It’s not intended for that. Just use this, as it was meant, as inspiration to do your own research and get more intimately involved in your own financial future for the long term.