We are all learning patience. Patience is a virtue right? I still believe though. The chart ends good.
Reminds me of the SSS Plan. Let's consider a reckless investor (hindsight is always 20/20) who did not have any bitcoins before they cost $1,000. Then s/he invested 50% of his total wealth (let's say it is just the absolute maximum that
can be lost, not an amount that
cannot be lost, which would have been an erroneous investment).
According to the plan, somewhere in between $2k-$10k, the raking should have started. But alas, the price turned down!
The bitcoins are only 20% of the purchase price
So what to do? The answer is very easy: nothing. After the crash in price, the amount of BTC in the portfolio has gone down to 17%, which should be an amount that can be lost (if 50% was, why is 17% suddenly not? Do you even math?)
With the double-down, that is tricky. I advise against. If you had double-down in your palette, you would have done it multiple times already, dragging your whole net worth down and giving stress by constantly having tied your fortunes to BTC.
But selling is also incorrect. Cutting the long, fat tail of improbable but +EV nice returns for ... nothing?
Why would you do it? Adding +20% to your non-BTC portfolio is not worth it. There is no gain in hedging (a loss instead). The mental strain for keeping the long tails in investments must be overcome! In other areas of life, it is good to clean up. In investment, that is called throwing good EV and hedging away!
If you don't want to think of BTC, don't think about it! Just don't buy nor sell unless you are sure that inaction will lead to forced decision soon, in which case you need to reconsider.
Love your posts.
I have invested differently up until today, made tons, lost it all again twice.
So have yet to learn a lot.
That being said, what I miss in your approach is that one should continue to keep an eye on fundamentals and risk/reward ratio of an investment.
We are active investors, coins, like companies, can do well, and gain real traction, real users, real utility, or just be stagnant or drop in real users.
As price in bubbles goes up, risk/reward usually becomes worse, and selling a piece is wise, but sometimes it's wiser to do nothing or buy more, if the growth of real users is even faster than the price.
Inverse is true too, it's not because something dropped a lot in price that it's a better investment and risk/reward ratio has gone up. If amount of transactions or real users also dropped a lot, or they lost their USP or just fundamentals also weakened strongly it might still be wise to sell and lock in your loss.
Easy rules to follow, like your SSS plan, are helpful, and secure, but if you want to do the job well, you will have to face the reality that investing, like entrepreneurship, is complex. There are no easy rules to follow. Everything depends on the situation. The best advise I can give is always try to be honest with yourself. We are emotional beings and fall in love with our investments, friends, partners, homes, cars, etc. But if something or someone is really not delivering the gains it should, it's in your best interest to face this as soon as possible, try to change it, and if not possible, dump it and find something better.
So I would say that cleaning up your portfolio from the losers can be very wise too, but you can only know this if you continue to study and judge the fundamentals and be as honest as possible with yourself. And ofcourse try to get rid of them on a rebound, or in a new bubble as chances are good sooner or later market price will overvalue again instead of undervalue.
