After the recent crypto crash, I did a postmortem on my behavior. What started as casual interest and minor research in crypto last May morphed into me caught up in the wave of greed and irrational exuberance by November.
I thought I’d left that behavior behind after dabbling with (ill-informed) day trading in 2007?
What’s fascinating is that I didn’t need to change our investing approach—stocks plus commercial real estate were working great—but I got sucked in anyway.
Mostly I invested in “blue chip” (ha) crypto like Ethereum or Bitcoin, but I still feel embarrassed to have put (and lost) money in projects like Terra or some alt-coins that…uhh, didn’t do well.
Luckily, I only played with a small portion of our money. I didn’t mortgage the house or force a change in our lifestyle. A reminder to everyone: diversify!
My new #1 goal with investing is to do NOTHING, ZERO, ZILCH if I’m excited by a project or an investment. Before committing, I want to scrub the delusional new relationship energy from my brain.
All in all, I’m treating this as a cheap lesson with life-long impacts. It’s fascinating and instructional to see this chink in my armor. I think I’ve patched it, but shall remain vigilant!
All this leads me this excerpt from this excellent piece, On Bullshit in Investing.
Bullshit in investing, be it wild over-optimism, deception or fraud, is as old as time, precisely because it is hard to resist the promise of easy returns and to tell the difference between innovation and make-believe.
The first step in avoiding being taken for a ride is to recognize that you are a mark for people trying to get rich off your money.
Burn the principle into your brain that financial markets are large and competitive and have a lot of smart people in them.
Easy money-making opportunities are almost never real; professional mercenaries would have found and exploited them first.
High returns with low risk explained away by complicated and nontransparent strategies deserve great scrutiny.
Ask questions; be skeptical; do not assume that just because brand-name firms or authority figures are involved that all is well.