I've been actively involved in securities trading for the last 25 years, both professionally and personally.

So here are a couple of lessons I've learned over that quarter of a century. Use them to your advantage as an investor/speculator. Or ignore them at your own risk ;)

1. You can be right, but not make any money.

So this happened to a lot of people in the DotCom area in early 2000. Yes, the internet did change the world eventually and yes, a lot of money is being made on it right now.

However, many companies that laid the basis for the internet infrastructure and bootstrapped applications, have all went belly up in the aftermath of the DotCom crash.

We all tend to remember the internet moguls that emerged from the DotCom area stronger, but forget about the numerous initiatives that imploded. Therefore: beware of survivorship bias.

Another way to look at this phenomenon is that, in order to make money, it's more important to buy something when it's undervalued then it is to buy something with positive fundamentals.

You can have very positive fundamentals, but not make any money because you're buying the asset too expensively. Alternatively, you can make money buying an undervalued asset with weak fundamentals.

Too many people confuse valuation for fundamentals. Fundamentals give you a scenario (positive or negative). Valuation gives an answer to how much of that scenario is already priced into the market.

2. In financial markets, statistics are pub talk.

It sounds so logical: the more historical data you have on a subset of a population, the easier it is to predict that population in future. The unfortunate thing is that this is actually true for repeatable processes, which financial markets are not.

Sure, it makes a lot of sense to look at data and charts in order to get a feel for where the current situation is in historical context. And yes, this might even lead to some worthwhile trading opportunities. But you have to understand that despite all this, your odds are still a coin flip on your next trade.

The only way to exploit a statistical advantage is to trade it consistently a lot of times. And every time you do that, you risk being hit by a black swan. An event that totally screws up your historical statistical analysis.

Even more so, chances are that the better your model or trading strategy fits the historical data, the more likely it is that it will eventually blow up. Have a look at the work of Nassim Taleb (https://nl.wikipedia.org/wiki/Nassim_Nicholas_Taleb) for more detail.

3. Don't mistake intelligence with a bull market.

A rising tide lifts all boats. When there's a strong bull market, you'll be able to make money on about anything in the space by simply following the trend.

That might make you feel like a very clever sod, but in reality, you just happened to be around at the right time. Sure, I'll give you credit for pulling the trigger, but don't let it go to your head.

What happens too often in these circumstances that people start betting the farm, in order to get rich even quicker. Throw some leverage in the mix, and soon you'll be ordering that Lambo and flying that 650. Or more likely: not. As you will get killed. At worst during ordinary market volatility. At best during the next bear market which always arrives.

Or to throw in a cliche: there's no sure thing except death and taxes. So don't act as if this doesn't apply to you. Stay humble. Make sure you don't get wiped out and can live to fight another day.

How this translates to my crypfolio

I am pretty convinced that blockchain is here to stay and will continue to create great opportunities for businesses, communities, and societies.

Having said that, I believe that a lot of cryptocurrencies are currently overvalued and headed to zero. Some other cryptos I consider to be undervalued and having very significant upward potential. Of course, I could be wrong as to who is who. So how best to play this? I'll consider two options:

• Own what you know (the Warren Buffet Strategy).
• Diversify (the Harry Markowitz Strategy).

Broad diversification is not my option because there is simply too little historical data available to do any meaningful statistical portfolio analysis. More over: the bulk of the market is overvalued in my opinion and therefore not a good buy. On the other hand, it's impossible for me to determine which individual cryptos are likely to dominate them all. So I'm ending up in the middle: a somewhat diversified portfolio of cryptos that I've researched diligently and are undervalued by some reasonable standard.

That portfolio I will carry forward, unleveraged, and adapt accordingly as new (valuation) information becomes available.