Jack & Johnny
So here’s the deal – investing in a volatile, highly publicized market like crypto one often finds themself in a bit of a catch 22. People don’t want to invest when they haven’t heard about all those massive gains, but by the time they hear about them it is often too late.
I’ve had discussions with many people who are not even investors, and when the subject comes up they simply tell me “Well, you buy low and sell high, right?”. So why doesn’t anyone take their own advice?
In the past, and with a particular focus on last year, crypto is pretty absent from the mainstream media until the first big hike in prices. Johnny down the street, who invested his savings of $5,000 suddenly has $50,000, and after he and all those like him tell their friends about their gains – the craze is on. Now, at this point the market is already peaking, and the reason Johnny has made so much is because he bought low – when none of the average investors had a thought about crypto. Now that they’ve seen the results, they want in, and so Jack from down the road does the opposite of Johnny – he buys high. After he sees the “proof”, and after the money has been made. Several months later, when the market has found support and corrected, Jack stands at a loss, as much as 90% or more if Jack and his buddies bought at the true peak. Then, they shake their heads, curse the “crypto bubble” and sell what they have in defeat. Johnny is on his way to the yacht club. Jack missed the boat. Don’t be like Jack. I’m here to tell you why it’s your turn to be Johnny.
A Bull Market
First things first, before I turn you into Johnny; those doubts that Jack left you with might tell you the gains have been make, and there’s no more to go around. To this I offer figure 1:
This is Bitcoin’s chart from about June 2017 to July 2018. This first thing you should notice is that we are still in an uptrend, even with the huge changes in price. This is important to remember, since it should reassure any investor that holding long term is likely to provide profit to even the least attentive investor. (Don’t panic-sell like Jack!)
Now, let’s take a look at point A. This is July of 2017, one year ago. This is where Johnny put bought his Bitcoin at $2000. He thought to himself, the market is a little down now – this is a great opportunity to buy low.
Move up the graph to point B. This is December of 2017, the point where Johnny said, “Holy #$@! The market is peaking, and my Bitcoin is now worth $20,000!” Johnny sold his Bitcoin, and told his buddies about all the money he made. Jack overheard, and experienced what we call “FOMO”, or “Fear of Missing Out”. He put his $5000 into crypto, hoping he’d do as well as Johnny.
Then this crazy thing happened – this crazy, utterly unsurprising, and predictable thing – the market corrected. This is how markets work, folks. You don’t just keep on going up forever. Any healthy market has peaks and valleys, where price varies. We continued in an upward trend long term, of course, but Jack panicked. When we reached point C today, on August 6th, 2018, Jack sold his Bitcoin for $6900, losing almost 70% of his money. In contrast, if Johnny had been in a coma for 6 months, woken up, and then sold his Bitcoin at point C he still would’ve made $4900… because of the long term uptrend.
The Moral of the Story
Life is cyclical. Trends recycle, things go in and out of style, and most importantly: history often repeats itself. For those of us who are investors, this is a good thing. This means we can learn from Johnny’s success and Jack’s failure, because now is the time to be Johnny. The market is still low, but is showing signs of recovery. We are over the hump, and the exciting thing is that there are new cryptos that are more volatile and therefore offer more possible gains than Bitcoin does. One more time for the people in the back:
IT’S BUYING SEASON. IF YOU HAVE BEEN THINKING OF INVESTING IN CRYPTO, NOW IS THE TIME.
I am just turning my first year investing in crypto, and even through all of my foolish mistakes there have been some great choices, and I now stand at over 10x my initial investment even now in this down market. In 6 months that number will almost definitely double, probably multiply by 5, and possibly go to 10x or more. In all of this, I have become not only a firm believer in the market and the technology, but I have discovered a love for education, writing articles for cryptofuturewealth.io and assisting my friend and mentor Jeff Lambert in his passion for crypto education.
To that end, I offer a companion to this article – Boarding Your Yacht. It’s simply a brief chronicle of how I got into crypto, what I did right, and what I did wrong. My hope is that I can help you become Johnny. If you’re interested in investing but don’t know where to begin, this will be helpful to you, and I offer it to all of my friends, acquaintances, and strangers, because there is no reason for everyone to miss the boat. I want all of you to make money, be successful, and afford yourself the luxuries of living an empowered, financially independent life.
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