I was having a discussion with a friend who wants to invest in Steem and upon discussing it I realized that the classic investment logic fails with Steem because the investor might fail to realize the subtle difference of Steem to other cryptocurrencies.
So my friend was like "ok, this has spiked a lot so I'll wait a couple of months for it to cool down and hopefully it will work out and get in much cheaper than if I got in now - besides with all the inflation, the price can't keep up - right?".
Yet, despite factoring the inflation, I noticed a fallacy in his thinking: He wanted to buy a fixed amount of coins. Yet if he waited, that fixed amount of coins would be diluted by then and represent a smaller percentage of the pie. It was something he hadn't thought about.
So, for those who want to build a small or large investment position with Steem Power, one would think that the optimal entry strategy is to find a buying opportunity where one can acquire the most coins for the least amount of money - even if that requires waiting for months. That strategy may work for practically every single cryptocurrency, but it doesn't necessarily apply for a highly-inflating asset like Steem (unless there is a good crash in the price, in which case it'll work).
The reason why it doesn't apply, is due to the high inflation of STEEM: For example, if one wants to try and wait for 6 months to buy 10000 STEEM, by that time these 10000 STEEM will represent a much smaller percentage of the total pie and thus the vote power that the investor will acquire for less money will also be smaller: These 10k STEEM bought at a later date could be the equivalent of buying 6k to 7k STEEM, months earlier, due to the inflationary effect.
So a lower price alone won't do the trick of getting in with a cheap entry point. The intended target for the buyer should be a certain percentage of voting power he wants to acquire instead of a number of coins. The later is meaningless as time progresses - or better stated it means different things in different times: 10.000 STEEM today is not the same as 10.000 STEEM in 2 months, 6 months or 12 months. Thus even a lower cost of entry buying a fixed amount of coins is wrongly calculated.
Example:
If investor A buys today 10.000 STEEM at 2$ each, next year he'll have at least 19.000 STEEM.
Now let's say price dropped at 1.3$ for next year same time.
If investor B waits a year to buy 10.000 STEEM, he'll pay 13.000$ for these coins.
In theory investor B got-in cheaper because he paid 7.000$ less.
Yet by the time investor B buys his stake, investor A's 10.000 STEEM have given him 90% interest (19.000) plus curation rewards (that I will not be counting).
So at 19.000 STEEM x 1.3$, investor A's position has gone up to 24.700$. And now investor B (at 10.000 STEEM x 1.3$ = 13.000$) will be lagging in both compound interest and curation rewards because his stake is so much smaller due to STEEMs getting diluted. Investor B indeed got in cheaper, he bought "the same" quantity, but by the time he did so that quantity no longer represented the same level of power and money-making potential.
So, as they say, time is of the essence here. Don't overlook that aspect if you are planning to invest.