For us cryptonians, it's seems impossible to open our phones or laptops without seeing hype about the massive gains in crypto markets for the last few weeks. As a result, several of my close friends, steemit and twitter followers have been coming to me almost in panic, asking where they can invest, what coins I recommend, or where I would put my money if I had X amount saved up in my nest egg. Well guys, I have a few tips to put out, but they're not what probably think.
Everyone calm down
The gains that are happening right now are nothing new, and certainly not anything to stress about. Was anyone losing sleep over the returns they could have gotten on Iraqi Dinar through FOREX during the first gulf war? What about during the BREXIT vote? Neither, and yet the returns were massive. Did anyone freak out about not owning futures in sugar during the drought a few years back? No, but it was selling for $70k a ton, rather than the typical $50k. The point is that investment opportunities slip by unnoticed, each and every day. For a wise investor, this should create a data point for a case study rather than a closed hair focal, but we’ll get to this later.
The wise investor also knows not to look back at opportunities which they have missed, but rather ahead to opportunities that were created as a result. Every single market movement creates an opportunity or undervalued buy...so just relax, and try to get some sleep. Like with Litecoin(LTC), I will try to direct everyone's attention toward variables which might make great opportunities.
Choose your character carefully
Of the big names in the finance industry, Warren Buffett is probably one of the most recognizable and most legendary of our times. But what makes the man behind Berkshire Hathaway’s high earnings and massively diversified portfolio? Calm, relaxed, well studied and well researched bedrock - that's what. Although I'm sure he's guilty of market manipulation today, young Warren believed in sticking with what he understood and doing enough fundamental analysis to understand it very well. But who can name a single famous day or FOREX trader? I know that I can’t (Soros GPB play doesn’t count), and I know whose p/l I’d rather have in the stock markets as well.
My associates and I always joke about the day traders, by calling them ‘gains chasers, because not a single one can explain to you why a stock they invested in is a good pick. Do you know why? It’s because they don’t understand what they are investing in. All they see are moving averages and dollar signs, never value or competitive edge.
Seems like a lot of unneeded stress, right? Well, unless dealing in microcaps where some will see 3000% gains (which most institutions do not allow, because they are not SEC regulated, nor are their purchases be FDIC approved), most day traders barely beat inflation.
Some people treat cryptos like micro/smallcaps
Actually, the majority do, which is likely due to the lack regulation and volatility. This is very exciting for the little guy whom feel caught in the rat race with their day job, and are looking for ways to get rich quick and gain their financial freedom. Well guys, if you treat these markets like the a microcaps, then these markets will treat you like a day trader, which isn’t a good thing. The reason that I bring this up is because we’re starting to see a lot of pressure added to the crypto markets by people whom are exchanging at very high volumes. In another article, I wrote about problems associated with the massive influx of layman investors, whom are attracted to crypto’s because of sucess sotries on the news. Although I agree that it is an exciting new subject, this is still the exact same game that’s been played as far back as the East India Trading Company but matches the volatility (in some cases) at the same levels of B2Gold.
Never heard of these guys? Well, are you stressed about missing on those gains? My point exactly….
Investment Advice
The purpose of this profile, it’s affiliated website (coming soon) and re-steems are to show followers a perspective and variables which they may have not considered, and may find as useful to their investment portfolios as my colleagues and I find them to ours. I (soon to be we) am not here to provide professional investment advice, but rather opinions on global events and how they may affect various investments.
That said, here are some rules that I generally stick to when investing in anything:
- Invest in value, not gains - Because value creates the biggest gains.
- Keep a high level of overall market cognizance - This includes politics, conflicts, disease, drought, economics, etc. You would be surprised what is relevant to your investments.
- Know what you’re investing in, and why it is important in the markets - Does your investment solve a problem of some sort, and does it do this better than the next group?
- Create objective scenarios of how the markets will react, not hopeful ones.
- Know how mass acceptance may create other problems (or opportunities) in other areas.
- Don’t get sucked into your gains (or losses) - Plan your dive, dive your plan. What I mean by this is that you should make projections and set stop losses to protect your investments. I have been made fun of in the past for liquidating positions 10 or 15% prior a crash, instead of at the crash.
- Invest in the shadows, not in the lime light - What I mean by this, is to look where others are not because that is where you’ll find the best deals on the high value.
- Don’t be a day trader - The p/l is not worth the stress.
- Use technical analysis to prove theories, find data points (events) or find good times to buy. Do not use technical analysis to find good buys. Value is discovered with fundamental analysis, not moving averages.
- Look back to learn, not to find regrett.
I also like to review gadgets and help new investors understand what they’re getting into, but I (soon to be we) will NEVER tell you where to put your money. The new investors that have been flooding the markets are looking to be told where to invest rather than how to educate themselves on it. If you want that, go to The Dollar Vigilante or other places that will tell you how they've been right, but never why. My goal is to educate and aggregate useful information and tools for investors, not start a cult following, and certainly not tell people to put their nest egg on black at the roulette tables. At times, I may share my strategy, but again - this is not advice!
Let me know what you guys think and if this post helps put things into perspective. I'm not known in my circles as a should to cry on (because we don't have those), but I'd love to hear stories about the insomnia that's been going around these days.
"The new investors that have been flooding the markets are looking to be told where to invest rather than how to educate themselves on it."
Could not have said it better myself
Nice post
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Oh come, @digicrypt, we've all seen the high quality posts you generate! Have you been having this problem as well?
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lol you are too kind. I have seen this a lot in chat and forums, ppl who are lazy and want everything done for them, including researching cryptos.
On the other hand, I have interacted with a few new Steemians who are working really hard to educate themselves on crypto and Steemit. I am very encouraged by this. I , like you, want to help educate others.
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I think that this will be the best thing for the markets at the end of the day. Unfortunately, a lot of people are going to get hurt and cry for the govr to solve their problems, which will me regulated coins etc....which I am equally excited about!
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Very good post, continue like this and you will be great, I am trying to grow in this community, follow me and I will follow you
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Such a great perspective. I cannot imagine a herd of lay-people (in the US) getting involved heavily, very doubtful. After 2 weeks of full time research, the process of getting/buying/selling/holding/storing crypto's is far beyond the casual investor. They won't spend hours looking at the merits of all these 700+ crypto's to determine what they are (or aren't).
I'm feeling more confident, but I've already asked a thousand questions and I'm moving slowly.
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One of the things that is most exciting about this rush, for me at least, is that the investors whom took time to educate themselves will have a new skill set which is applicable to every investment type out there.
Don't worry, it's not a race. Keep asking questions if that's how you learn!
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Its funny, earlier today I got upset that I didn't find out about crypto-currencies sooner because I would of had more money to invest before the recent rise. But, I decided not to let it bother me, and instead, put that emotion into figuring out what moves I can make now for the future.
This is a really well written and informative post.
The advice and insight you have given is greatly appreciated, especially from a newbie investor like me. Thank you!
Great post man, keep em coming!
Upvoted and Resteemed.
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"Know how mass acceptance may create other problems (or opportunities) in other areas"
would you care to elaborate? :)
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That one is tough.
Should bitcoin and other crypto-currencies become widely accepted, I can see how many different opportunities would arise for those of us who have bitcoin.
I cannot foresee any obvious problems that may be created from this acceptance, but I'm not negligent to the fact that there will be some.
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Value creates the biggest gains
Can't agree more. as always, a great post.
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So many solid principals to focus on. Great article.
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Great article.
I voted, followed and resteemed. :)
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I am a new investor in Cryptos, although very technical but relatively new to this world (compared to you and most of the followers who are commenting)...this is a fantastic article. It's meant for guys like me...although I'm in this for the long haul...not a day trader, but need to put more effort in my evaluations. By the way, congratulations in advance on the soon to be "we" part :-) Best wishes!
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Thank you for challenging my mind Lennart. I like hour last resteemed article. I know which point you were trying to drive with that...it's almost a confirmation of this article. It's almost a kick in my butt to get things moving on my own, even though I am on the rat race/ ferris wheel...I've gotta find a way to leap out of the loop - so to speak. Thanks!
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To be honest, I'm hardly thinking when I missed an opportunity to earn and gain crypto easily. I mean, it was just right there but I haven't took then chance. Gladly, there are some event which has a second round event. There rewards are still generous although it differs from the grand prize, but it is still captivating. Given the opportunities, we, traders must appreciate and grab the chance. See it here until when this competition will last https://www.kucoin.com/#/rank/ONOTR2
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