Cryptocurrency investment series Part 1: “In a bull market, everyone is a genius.”

Although the landscape has shifted, through paraphrasing the words of revered value investor Benjamin Graham; the only thing most people can be confident of while or if ever forecasting future crypto and token returns is that you will probably turn out to be wrong. The only indisputable truth that the past teaches us is that the future will always surprise us – always. And the corollary to that law of financial history is that the markets will most brutally surprise the very people who are the most certain that their views about the future are right. Staying humble about your forecasting powers, as Graham did, will keep you from risking too much on a view of the future that may well turn out to be wrong. So, by all means, despite the current plethora of speculators and incredulous statements of millions made on one ICO investment – we advise that you should lower your expectations – but take care not to depress your spirit. For the wise, intelligent investor, hope always springs eternal, because it should. In the financial and cryptocurrency markets, the worse the future looks, the better it usually turns out to be. A cynic once told G.K. Chesterton, the British novelist and essayist, “Blessed is he who expects nothing, for he shall not be disappointed.” Much rather, “blessed is he who expects nothing, for he shall enjoy everything.”

Alongside this, we must also underscore that psychologists led by Baruch Fischhoff of Carnegie Mellon University have documented a disturbing fact; becoming more familiar with a subject does not significantly reduce people’s tendency to exaggerate how much they actually know about it. That’s why “investing in what you know” can be so dangerous; the more you know going in, the less likely you are to probe for weaknesses. This pernicious form of overconfidence is called “home bias”, or the habit of sticking to what is already familiar. In short, familiarity breeds complacency. When we are too close to someone or something, we take our beliefs for granted, instead of questioning them as we do when we confront something more remote. The more familiar a token or coin is, the more likely this will turn investors into lazy one’s who think there’s no more need to do any homework.

As the crypto markets heave and crash their way up and down day after day, the wise investor can take control of the chaos. Your very refusal to be active, your renunciation of any pretended ability to predict the future can become your most powerful weapons. By putting every investment decision on autopilot, you drop any self-delusion that you know where coins are headed, and you take away the market’s power to upset you no matter how bizarrely it bounces.

Dollar-cost averaging enables you to put a fixed amount of money into an investment at regular intervals. Every week, month, or calendar quarter, you buy more-whether the markets have gone (or are about to go) up, down, or sideways. Any major mutual fund company or firm can automatically and safely transfer the money for you electronically, so you never have to write a cheque or feel the conscious pang of payment. It’s all out of sight, out of mind. The ideal way to dollar-cost average is into a portfolio of crypto-index funds or ETFs like Huobi’s HB10 or OKEx's OK06ETT which owns a percentage of the top tokens and coins within the market, or protocols like NEO , ethereum which serve as the foundational layer for many decentralised applications to then be built. That way, you renounce not only the guessing game of where the market is going but which sectors of the market – and which particular coin or token within them – will do the best.

Despite what the general consensus amongst speculators may be, day trading tokens or coins for hours at a time is one of the best weapons ever invented for committing financial suicide. Some of your trades might make money, most of your trades will lose money. And your own eagerness to buy or sell a coin can easily impact negatively into your returns. The costs of trading also wear away your returns like so many swipes of sandpaper. Buying or selling, along with repeated conversions to FIAT and vice versa can incur transnational fees end up totalling another 4 – 8 % of the total investment.

Irregardless of context, the overall lesson for any market is clear, don’t just do something, stand there. It’s fine for everyone to acknowledge that the term “long-term investor” is redundant. A long-term investor is the only kind of investor there is. Someone who can’t hold onto their investments for more than a few months at a time is doomed to end up not as an investor but as a victim.

The next few articles in this series will both elaborate upon and provide a holistic view on the various perspectives, insights, and news surrounding cryptocurrencies for the sophisticated, long-term investor. Through doing so we hope to elevate the public perception and build a more robust network and foundation for the future of the blockchain and cryptocurrencies.

As a final note; there are many paradoxes in life. But one of the most important is that it’s the questions we ask, not the answers, that pave the way for progress. So never stop asking, constantly research, seek out opposing opinions to test theories, and never assume that you or anyone else is correct at first glance. If you can learn to ask the question; “How do I know I’m right?” and back your findings up with factual evidence, you’ll eventually progress further than ever imagined.

I’ll finish this by quoting my favourite Quoran Dushka Zapata with her mention of the Zen Buddhist notion of “shoshin”, “beginner’s mind”. Shoshin suggests that rather than approaching life as “I know” or “I am an expert”, I approach life as a true beginner: in awe, with wonder, receptive, empty of preconceptions. It’s not about getting somewhere. It’s about experiencing compassion and being truly open, the optimal state for learning. Shoshin is why I call myself an amateur.” I believe that sometimes there’s no better position to take (especially in cryptocurrency) than that of a “Shoshin.”

References:

Benjamin Graham: the intelligent investor
QUORA: Dushka Zapata
Huobi ETF HB10
OK06ETT