A lot of people are wondering if they missed the boat on Bitcoin, but that’s not the question they should be asking. Here’s a few important things to think about before you go about making any kind of investment – whether it’s for yourself, your business or your portfolio…
- January 6, 2018
- 86 comments
So, what would be then “investing” when it comes to crypto currencies if buying and holding is not investing but trading?
I appreciate your concern, Jeff, and it’s good to remind people that should not lose their heads with what’s going on currently in the cc market. Which is difficult, because so far and surely since spring of 2017, the market has known only one direction: up. My portfolio has increased more than 700% in value, in 3 months. OK, as long as I haven’t sold anything that’s on paper, and it’s before taxes. In hindsight, of course I invested way too little, because I was very careful and spent (invested?) only the money I can live with in case of the unlikely event of losing literally “everything” (which would mean that there’s no future use of the cryptos I bought).
Nobody can predict the markets, not the stock market, not the real estate market, not the crypto market – except with insider info, which would make it illegal in many cases. In most cases we’re talking about guesstimates. Sometime the experts hit the mark, sometimes they don’t – but they make sure to sell us only their successes, hiding the stories their losses. Sure, some people are smarter, and technology helps too. But on average, most mortals will hit and miss when it comes to “predicting” the markets. At least the efficient markets. I am glad I invested in some cryptos. How it will develop? I can’t say. But I’m riding the wave that comes along may way these days. I was too young to ride the .com wave, this one I will ride. Being careful, of course, never losing my mind.
Even if you intend to buy and hold, when you have to deal with the volatility bitcoin has seen in the last month you are still need to be a trader to get into the market. As for your very admirable 700% in three months, that sounds more like trading to me than investing!
So, what is the difference then between trading and investing? Because I can’t see what’s the connection between the volatility and the classification of a ‚trader‘. Obviously I am not a professional, that’s probably why am having difficulties with the two terms. My gut feeling tells me that a trader is someone who… trades, and maybe constantly. Buy, sell, buy, sell,… What am I not understanding then?
The difference seems pretty clear to me. Investing is laying out money for the goal of gradually building wealth over time, holding assets for an extended period of time. Trading involves the more frequent purchase of these instruments with the goal of generating returns that outperform buy-and-hold investing.
2018 will be the year of INFLATION …. I’m into cryptos BIG TIME..Bought Litecoin at $20 ,
pick up Pillar at 8 cents own Bitcoin and Ethereum. How can you ignore a market cap that is approaching a trillion dollars.Maybe we should just keep participating in a fractional reserve banking system that pays us nothing on our bank deposits.
Look into the long term (30 years and more) trajectory of index funds. I think that will help you understand the difference better and appreciate what Jeff is getting at more.
Being succinct, investing is not simply buying and holding an asset, but buying and holding assets that have a proven stability and performance over time (Investing in the S&P 500 for instance). Because cryptocurrency is still in its infancy and has proven to be highly volatile over short periods of time, for a person to be successful in the market over the long-term, they would have to be a professional trader. In essence, for a financial expert to declare that Bitcoin (basically all cryptocurrency) to be a trader’s asset, they are saying that if you don’t know how to judge when to get in and out, you will eventually lose.
Investors invest in assets that have proven to perform consistently over time — having the capacity to survive bearish markets and downward corrections consistently.
Does this mean that cryptocurrency does not have the capacity to create riches? Absolutely not. It simply means that you can’t simply buy it and hold it without taking the enormous risk of losing what you have invested. It is the volatility that challenges long-term performance that makes cryptocurrency a trader’s asset at the time. It may one day be investors asset, but with major players that have entered the game, which is zero-sum (somebody has to lose for someone to win) game, the average guy does not stand a chance of winning consistently in the market.
Personally, I would hedge against my activity in the crypto market by creating my own personal stop-loss mechanism — basically cashing out a certain percentage of my gains on a periodic basis. While this will limit the compounding mechanism and slow down growth, it does guarantee the gains I cash out.
Rick, can you explain about more about your personal stop loss method. I use a traditional trailing stop loss but with the volatility it doesn’t seem the most efficient way. Thanks!
I disagree. think of VC funds. they invest in startups…they are not trading even though the volatility of startups can go up or down exponentially in a few years.
VCs have a built-in reserve because they know that only a small percentage of their investments will pay off. They calculated their losses in. You can’t do that unless you have the kind of money VCs have.
Personally, because bitcoin is not backed by anything, I believe it’s pure speculation. It’s bound to crash sooner or later.
Jeff, thanks for the informative video that clarified things!
The definitions I’ve heard, are that Investing is when you put money into a project that you believe is worth more than it’s current value, and are willing to wait (however long) for it to reach that trading value.
Trading is when you put money into a project, in the hope that it will go up in value, and you can pull out more than you put in.
99.9999% of Crypto Investors are traders, because all they’re concerned with, is making money. They have not done any research into the coins they are putting money into, and they do so out of Fear Of Missing Out (FOMO).
That was very helpful and timely ….especially reminding us of the right question to ask
Totally right. Too many people are taking risks that they do not fully understand. Please, people, be careful.
As always your natural theorist brain will stimulate thoughts beyond the immediate point.
The value of understanding the difference between investment and trading is huge – for we can so often approach anything in life with knowledge but not understanding… and sometime just Knowing something can be a dangerous thing if you don’t actually Understand it…
‘Things that glitter and shine’ are always attractive but can end up as: ‘not all that glitters is gold’.
Thank you for a brilliant stimulus piece – and of course thankyou for sharing your financial Understanding.
with regard to your video on bitcoin you say a lot of good stuff
it is only at the end I would disagree. As an example I put a small sum, c. $500, last year into Dogecoin. As it happens that is now worth around $10,000. For some that is a life changing sum but I have felt absolutely zero need to monitor that small investment on an hourly, daily, or even weekly basis – and that remains the case.
So, yes, you need to take care of the downside but there are other ways of doing that
Thanks for the video
You know that Dogecoin was created as a JOKE, right? (Google it)
Yes, it’s going up in price, but only because people don’t realize it’s a joke coin, and hasn’t had ANY code changes since 2015. This is a perfect example of people who don’t know any better, putting money into something they know nothing about, and that covers 99.99999% of the people putting money into crypto.
This is not investment advice, but my opinion, Dogecoin is not a coin to HODL (Hold On for Dear Life) It’s a coin to DORP (Don’t Own, Reject Promptly).
Thanks Ken! LOL
Thank you Jeff, there has been a lot of confusion about this topic in my circle. This helps put it in perspective.
Thanks for insights Jeff!
You are absolutely right about the volatility of BitCoin, and that it shouldn’t be considered as an investment but trading. Since watching what is going on with BitCoin and getting different opinions from smart and qualified people, most agree it’s going to go up for the next few years, but what happens after, nobody seem to know. So, as you said, knowing when to go in and out of the market is crucial 🙂
clear as water, you did it!
The chance to win quick money exists, but aso exists the chance your money devaluates in a minute. In that cases, human being always consider just the first option. And two of the Cialdini’s persuasion laws applies here: scarcity and consensus (when they are uncertain, people will look to the actions and behaviors of others to determine their own).
Jeff, You should get with my friend Ian Balina, he knows who you are. He is a big name in crypto ICOs now and has read your book. There are more than just bitcoin out now. Some of these are new start up companies raising capital that actual offer real value to society with their tokens. Some are solving a specific problem or making something more efficient. For example, look at Wabi and PowerLedger. You really should get with Ian, I am sure he would love to meet you sometime, and you can learn what the ICO market is. It is going to totally change the world, especially how companies raise money.
Hey Jeff, thanks for your comment on this.
The Bitcoin community has a phrase, it’s called ‘HODL’ing’ or just HODL (a misspelling of ‘hold’, which has also come to be known as ‘Holding On for Dear Life’!).
The HODL mindset is more akin to investing than trading, i.e. you just buy and hold, come hell or high water, rather than looking to time trades in and out of the market, which as you say is nigh on impossible due to huge volatility.
I’m a Bitcoin HODL’er and have been since 2013. I’ve made many times my initial ‘investment’ since then, but I would never bet the ranch on crypto. It’s just too risky. Allocating a few % of my overall investment portfolio to it won’t hurt though in my opinion (however, like you I’m not a registered financial advisor so don’t take my word for it!).
I’m old enough to see crypto’mania as like the dotcom boom of the late 1990’s. Many are going to fail, some are outright frauds, but some (the ‘Amazon’ style coins) might just change our idea of money and underpin a new form of exchange.
There’s a long way to go though. Bitcoin has huge scalability issues right now – it can only transact at about 7 tx/s, compared to credit card peak throughput of about 42000 tx/sec, and is power hungry when mining new bitcoins / confirming transactions which means the network sucks up massive amounts of electricity and emits huge Co2 emissions.
Of course, there are alternatives (altcoins) to Bitcoin which avert these issues, but as you know better than anyone, in marketing, the first mover gets the lions share of the glory, and Bitcoin has come to occupy that part of the brain for crypto’s, so I think people will be sticking with Bitcoin for a while and hopefully, it’s underlying technology will evolve and improve over time. Cheers!
Is ALL present-day cryptocurrency activity trading and not investing? That’s quite a blanket statement — especially when various analyses actually do reveal the longer-term, investment mindset.
Despite years of market volatility, some familiar with cryptocurrency are “HODLing” the cryptocurrency to realize its longer-term value — interesting perspective; thanks for sharing, Daren.
The longer-term rationales for this approach point to an investment mindset:
– The intrinsic value of cryptocurrency (in spite of market volatility),
– How this technology compares to decades-old transaction-processing technologies (like for credit cards), and
– Longer-term operational challenges (like energy consumption per transaction processed).
These long-term rationales sound quite different than, e.g., “I’m checking prices to see if the $500 I risked has appreciated enough to get out.”
So isn’t it fair to say that one’s investment analysis could conclude something like:
“Blockchain and cryptocurrency have potential long-term intrinsic and market value, and it is worth enduring high volatility and risk of loss in an attempt to achieve gains on that long-term potential.”
Jeff fairly acknowledges this long-term possibility 3:00 into the video: “I’m not saying that [cryptocurrency] won’t be successful in the long run. I’m not saying blockchain isn’t a huge development for the world”.
However, Jeff’s warning shortly following, “know what you’re getting into,” applies regardless of whether the long-term investment mindset is in force.
For example, Bank of America’s investment in blockchain’s longer-term potential through many new U.S. patents (not specific to cryptocurrency), doesn’t mean the news headlines are also reporting increased buy-and-hold positions in cryptocurrency itself (like the HODL’ers practice). That is, even if long-term investing appears to be happening, it might not be fully relevant to cryptocurrencies themselves.
So it does appear that longer-term investment approaches around cryptocurrencies are possible even with today’s market volatility. But — does it make sense? Open for comments.
Also, Jeff – about the highly topical video: I’m guessing you’ll see a spike in viewership (sometimes volatility is welcomed?). And perhaps your decade-plus portfolio of Internet media has room for some volatile, short term spikes? 🙂
Absolutely agree with you Jeff. It’s hard to get the intrinsic value of bitcoin. Will definitely stay away from it.
That was brilliant. Money matters to all of us, whether we’re entrepreneurs or 9to5-vers, and this advice is priceless.
Thank you. That was the simplest and most clear explanation I’ve ever heard on the investing vs. trading. In just a few more minutes you cleared up a lot of confusion I had around Bitcoin!
Hey Jeff, Thanks for your input.I guess that I`m looking for more confirmation to my current stance on crypto`s.
Have a friend I call crypto crazzy. He`s all in ,so I call for updates every 10 days or so. Also read a book by James A, a crypto guru and came away hating the idea even more.
Cant buy it with FRNs, need to loose going thru exchange for conversion, cant hold either type of “wallet”, cant locate the cloud and they say it`s secure. So before buying any of it I suggest taking the time talking to a specialist to get even more confused.
Another thing to consider is the fact that the exchanges have been freezing up on the going in side, what happens going out,liquidity side ????
On the positive side the US could go BK and block chains could continue on world wide believing we are only about 4-5% of the population.
It`s transportable, i.e. can cross borders easily. I like that. TRANSPORTABLE is the only characteristic it includes of SOUND MONEY, and fails the others .It only is because someone SAYS IT IS.Sounds kinda FIAT like the others.
Thanks and keep up the good work.
Hah, I got suckered into reading that book too. I do want to learn how to become a Bitcoin Miner though.
R. Shawn McBride
I agree with you. Thanks for being a voice of reason in a crazy time!
That absolutely clarified things to the last nut and bolt for me! Thank you Jeff… you just calmed a roaring sea of thoughts within with that difference between trading and investing. Must watch for all who are on the fence with Crypto..
Dumbest thing I ever heard from you
Trading vs. investing – very informative, thank you.
Many thanks for clarifying the difference between an investor and a trader. Awesome insights about bitcoin. Bless you.
I seem to live on the moon, but I still have not understood what bitvoin is and all those crypto currencies. Could someone explain this in a few short sentences. What is it supposed to be good for?
I’m not much of an investor. I’m a pastor, 55, we have 7 kids and no life savings.
My son tipped me to crypto, I entered 8/31/17 have since invested a total of $2600 and this morning my account is over $8000. For me it is an investment because blockchain as a technology is worth investing in. I encourage you to give some encouragement to your following so they don’t miss out.
In a previous job I was the COO of a $550M hedge fund.
For the risk averse your counsel is wise. But if you look at the market capitalization of cryptos which this morning is over $800B and last week was just over $600B , there is a trend here not to be ignored.
So Jeff, if you put your money into oil & stocks your investing. If you invest in game changing technology that can make a huge difference in the world your trading.
According to Webster, the definition of investing is “the action or process of investing money for profit or material result”.
At its core, everything we put our money into is some form of investment driven & influenced by external forces that aren’t particularly obvious. Establishment traders in the stock market are pouring billions into technology that can get there trades in a fraction faster to gain the edge. The average shmuck is always the last to know no matter where you choose to invest your money.
Its all investing. Be smart. Educate yourself, avoid the pulls of greed, think long term & never invest more than you could lose.
What should I say about you except you are a great man and invaluable mentor. Thank you so much for differentiating between being a trader and being an investor. The difference is crucial. Having being one of your fans in the last 4 years and being on your database, I was waiting for your feedback on bitcoins. The reason is that I listened more than once to your biography that you were involved in the stock market and sending emails to your client before Launching your online business.
Thank you once again and have a thriving new year.
Solid, sound advice. Thanks for sharing.
thank you Jeff … this was SUPER Helpfu;!
Thanks for the great perspective! We put a little money in crypto to watch what happens and learn about this super interesting development in the world. It would be nice to get it back and then some, but it’s a very small percentage of our portfolio. Overall, it’s been pretty fascinating. If nothing else, I think it’s important for everyone to at least be aware of crypto… it’s a huge development in our world today.
Wow! Thank you! Very simple and valuable advice. Thanks!
Spot on Jeff, and shows you genuinely care for the people who follow you.
I work in the financial industry and the ‘hold on for dear life’ approach to crypto currencies is gambling, not investing—even if some people are leaving their money in over the longterm, they are hoping they got in at the right time and that it keeps heading up. Investors perform fundamental analysis prior to investing in a company and have a clear understanding of the runway for growth over a certain time period, (e.g. 12-18 months) as well as as an investment thesis that they carefully watch. Crypto currency is so voltile because it is not regulated, not backed by a government, and not backed by anything tangible. It is not secure, so even if your investment appreciates, it can be stolen.
Will people make money in crypto currency? Absolutely. Just as many gamblers get lucky and make money. If you are not a trader performing technical analysis or an investor performing fundamental analysis, then you are a gambler. And there’s nothing wrong with that. Gamblers understand that they can lose it all and accept that fact.
Blockchain is a game changing technology (like artificial intelligence and cloud computing) so it shouldn’t be ignored. There are companies (whose stocks have less volatility) that are investing in Blockchain technology that the non-gambling folks can invest in—easily found with an internet search. But again, understand what it is that you’re investing in and perform some kind of analysis—otherwise you’re still just a gambler.
Trading vs investing…thanks for explaining the difference. That’ll be helpful for lots of things going forward, not just crypto-currencies. Thanks, Jeff! Happy New Year!
As always, wisdom galore.
Once again, thanks for being authentic and sharing from the heart. Appreciate your perspective on this topic as well as the bigger picture idea. Great to look at crypto currency from outside the volatility and learn more about it without the “investing” frenzy.
Dr. Angelica Underwood
I’ve done Forex trading and now investing in crypto both time and money which has been the best decision ever. I turned $800 to close to 5,000 or more in less than 2 months. Jeff, you are absolutely right people must be careful in what they invest or trade their money in but crypto is not as high risk as stocks and Forex where you wash it or place a stop limit. Crypto is the wave of the future and if you have been bitten by the crypto bug you know that it is exciting and you can control your money. My friend became a millionaire. If you do crypto and you are a beginner begin with fixed ROI to be on the safe side and do your research.
Jeff, I agree with most of the comments. This is helpful. Thank you.
Candess M Campbell
Thanks Jeff. I’ve been a student of yours for many years. Now I’m reading the book Money: Master the Game by Tony Robbins. I’m sure the two of you must be friends. You are both great leaders in business.
Hi Jeff, first I’d like to thank you for addressing this topic and to say I have a lot of respect for you and the approach you always take to educating people. But I need to disagree with you about Bitcoin. Not everyone who purchases Bitcoin is a trader. I think that an investment exists whenever someone purchases an asset with the intention to hold it long term for appreciation and that is certainly possible with Bitcoin. The difference is in the intent of the purchaser. Yes, there is a high degree of volatility but volatility does not determine whether or not something is an investment. Certainly there is an equal or greater amount of volatility investing in many biotech companies, which can easily go to zero based on one announcement from the FDA. To me, anytime someone can make a very small investment with very little money at risk in exchange for the potential of growing that money multifold, it is an investment worth making. The key is not risking more money than you are comfortably willing to lose and with that attitude you have the potential for life-changing returns. Just because it goes up more quickly than you expected does not change it from an investment into a trade. Much better for you to advise people on how to invest versus trade than to tell them to stay out completely, which I think is a disservice.
This is not the same as investing or trading. If you get a little more educated there is a huge window. I would call this educated gambling. ITS A SIDE bet , don’t use money you don’t want to lose. That being said, I will tell you that some of us are making 6 figures monthly on this, learning with HOUSE MONEY after taking out the original investment. The window will shut soon, just sayin’ its a very unique time..this is more about this specific time before it gets mainstream.
Thank you, thank you, thank you. This was beautiful insight and so helpful putting everything into perspective. Everything is so screaming bitcoin like it’s the next sliced bread. People are telling me to get into it and now I understand what it is all about. So appreciate your sharing.
Thanks, Jeff, for underlining this important distinction between investing and trading. As I look at the comments, it seems some folks still don’t get the difference. My mom and dad were such thoughtful investors for over 8 decades, and I learned so much about investing temperament from them. They were always looking for the long-term, solid investment (I have a lot of Apple with a cost basis under a dollar, for instance) so I learned not to be seduced by shiny object syndrome. And to your question, I LOVE seeing you address newsworthy topics outside of internet marketing! More, please!
Jeff, well said… you framed it up quite nicely. It’s interesting to see how easily good advice can be ignored when the potential of making a quick or seemingly easy buck is involved. Many don’t realize that trading is a zero-sum game. For every trader who got it right, someone else got it wrong. Money is not ‘created’ in the process. With investing, the investor is capturing the return for the value that is created, over time. Your video also made me think about how the concepts of trading v. investing apply to the entrepreneurial journey. There are “traders” and “investors” there too. In some camps it’s about learning the tricks of the trade, then playing the game for a fast buck. In others it’s all about about creating value for clients, customers and followers over time. Thanks for being in the value camp, and especially for sharing with us what you’ve learned along the way.
Awesome, sound, logical advice…HOWEVER, like any FREE advice, they people who should put value in it won’t and will end up losing in the end. I see comments like”…I agree with “most” of what you said.” or “…I agree with everything “except”. At the end of the day, a fool and his money are soon parted.
All the BEST!!!
For the difference between investing and speculating, read Benjamin Graham’s THE INTELLIGENT INVESTOR. Jeff is consistent with the advice provided there.
Thanks, Jeff. That was great, “down to earth”, practical advice. Excellent points about being an investor versus being a trader.
I invest in btc by mining coin everyday. I don’t care about the ups and downs of the price I agree with Jeff, trading is the hardest and most stressful. I mine bitcoin for the long term as an investment. Very simple and stress free
Thanks, Jeff! I needed some solid direction to go on since I have been toying with the idea of getting into Bitcoin. I’m not crazy about the idea of putting my money on a roller coaster. I also want to keep my stomach in a settled state as much as possible. What good is making millions and having stress-related illnesses that will prevent you from enjoying your money? I’ll settle for happiness in the things I have now, invest wisely, and work on my business that keeps growing steadily. 🙂
You are so right Jeff. Jumping into Bitcoin now would be just like jumping into the ‘next big thing’ To make money on line or via the markets you need to stay focused on one thing not chase phantoms
W. M. Raebeck
Interesting, Jeff. Another thing you touched on, aside from risk, is TIME. Long-term investing may take research and organization, but trading takes real TIME. The constant vigilance (that you called boring) may be at the expense of something else one might be accomplishing. My late father was a savvy market investor, always long-term. And, in fact, the way I bonded with him was to seek his advice about the market. But toward the end of his long life, it struck me that if he’d spent one tenth of his portfolio time with his children and grandchildren….we might have been a better family. Money is real, but watching money grow and shrink is something of a game and a gamble. I appreciate your words of caution. Getting in ‘the game’ isn’t only about financial loss or gain, but also about how we spend our time. My father was truly a great man, who took care of business and left his second wife comfortable, but he gave much of himself to his numbers (after selling precious real estate he loved). Based on that, I tend my gardens for long-term security.
Thank you very, very much, Jeff, for the simple and clear explanation about Bitcoin and other Cryptocurrencies, and differentiation between Investing and Trading!
No Guts No Glory, Morning glory
What people forget is that big rewards come with risks. If you want to work your 9 to 5 job forever, leave no legacy and complain about taxes, politics, etc for the rest of your life, then don’t take risks. Don’t start your business, don’t invest in bitcoin, just sit on your behind and keep calm.
I have put $20K in bitcoin around $500 per coin years ago. At that point it was all very risky and very unproven. Bitocoin just came down from its $1,000 high and kept going down for a year and I kept buying. $200 every two weeks.
The thesis is very clear. Bitcoin is gold 2.0. It is an asset that has limited availability by design. It is an asset that cryptographically protected from being manipulated. It is a store of value over the long term. Many people will realise that and would like to own a piece of bitcoin. That is why the price is going up. The fact that the price went up so quickly does not necesseraly mean it is a bubble. The price may continue to appreciate or just stay more or less flat. Can bitcoin capture 10% of gold market? I certainly think it is possible over time. That will take the bitcoin cap to about $700B, which is a double in price from where it is today.
So the future for bitcoin is bright. Everyone, need to understand what the bitcoin actually is, before speculating on where it is going (which I think none of the folks here actually did, meaning noone spent any time reading through the simple bitcoin.it wiki). So there you have it. Go read the wiki, educate yourself on bitcoin, then think about the price.
Thank you Jeff! As always I really appreciate your input, wisdom and knowledge.
If people think Bit Coin and Block Chain are good “investments” they may want to think about why they haven’t “invested” in Russian Rubles to date. ( it free floats – not attached to a currency)
My masters in finance was in researching international currency movement. This your wisdom to me is quite sound.
In the late 1990’s I was hired by four BC investors to write their business plan on a similar to Bitcoin idea. ( may have even been Bitcoin – I don’t remember). I just remember after substantial research then I told them I had concerns and thought it was a bad idea. They were all barter club members so barter people tend to play in that “trade units of time” and “value of services” space. Long story short nothing came of it.
With this said, as a Writer, Speaker, Trainer and someone who uses to love running Robt Kiyosaki’s Cashflow games on a limited play level, I think it could be fun to create 90% of my writing products for cash / credit payment and 10% would accept Bit Coin – and then be unattached to the outcome. Just trade and play.
I’m not there yet. But it’s a fun thought to kick around.
Thank you Jeff for being the voice for Common Sense. I hope your video goes viral.
And like you, I don’t see it as an investment.
Love the video and dig on the comments from those ‘trading’ and HODL’ing Bitcoin. THANK YOU!
Thanks for your advice about Bitcoin Jeff! I already knew that I wouldn’t have any dealings with them! Bitcoin has been sending me spam emails for over a month now. And when I unsubscribe, well this just seems to spark of more spam! I have no respect for anyone that uses such tactics and therefore would never have anything to do with them! A good reputable business, company or person would not force themselves on others!!
Daphne V Smith
As someone who’s been curious and admittedly confused, I appreciate your information. I could have asked people I know who are enthralled with Bitcoin but I didn’t want a sales pitch.
Your experience and clear explanation answered my questions. Now, I can make an informed decision either way.
Thank you. Well done!
Awesome wisdom, Jeff. I’ve always loved what you have to say about business, investing, etc.
Jeff: considering the number of replies you got to this video, I can think of ten business ideas you (or anyone) could start right away. Here’s just one: a automated trading platform for crypto-currencies that finds the lowest spread (bid-ask). Traders could “scalp” the difference in crypto-currency spreads and pocket the difference. Glad you posted this video. Would love to hear more of your thoughts on non-finance or non-business topics, kind of like Scott Adams does on Twitter. All the best, and here’s hoping your next trade is a profitable one!
Bitcoin is not backed by tangible assets such as gold or real estate. It’s just speculation with wind.
I prefer invest in real estate, raw materials, metals and precious stones.
I have followed your path from Michigan to Colorado and from trader coaching to launching (still working toward a launch).
I agree with you 100% on trading being the toughest thing- or at least tied for first. I help teens takeoff to realize their dreams- teens can be as challenging as markets.
I did see the set ups on the crypto-currencies after seeing without acting on similar set ups in bitcoin under $25 and at $325 to $425. I decided to seize the opportunity and have done well. The problem is that it takes ENERGY to make money in volatile markets IF you have skill to navigate both the ups and of course the down moves that always come.
I’d love to see more on the distinction. I for example see with parents of teens a need for investment of attention. There is often a deficit there! It is vitally important that we all get better in the new win-win paradigm with our investments. Maybe you could talk about good investments versus flash-in-the-pan JV partners. Why might you say yes or no to a JV opportunity to “invest?”
I’d love to see more on long term view and short term over-focus. We live in an instant gratification world and need to move in a new direction to thrive like we can with new ways of navigating life together. I love the perspective and I need to preserve my own mental energy “capital” for the investments that matter most. There is a tradeoff with trading! The cost isn’t worth it for most.
Back in the 80s I was trading in silver futures. Studied the market, supply and demand, effects of world events, and anything you can think of that could effect silver. Thought I knew what I was doing, and made money at it. Was going on vacation, so closed out all my positions on a Friday because I wouldn’t be able to watch the market constantly. That weekend the news broke that the Hunt brothers were trying to corner the silver market, and they were the reason the price of sliver had been rising, not anything I thought was doing it. Missed being wiped out purely by luck. I haven’t traded since.!
One of the BEST and MOST ACCURATE commentaries on CC that you could provide! (Thanks! You’re right on target!) I remember the RE and Stock Market soared and then busted during 2008. (I was on my way to a Joel Comm event in Denver and when I walked into my hotel room and turned on the TV, the DOW had plunged to just below 7,000. (But look what’s happened ten years later!) BitCoin may be ascending beyond belief, but you’re right: It’s going to spike and fall periodically. If people have their hearts and minds set on investing, then invest only what you can afford to part with. And if you can’t stomach it (and obsess over the numbers 24/7) then stay away! If people want to jump into the game to trade, then once again, you’re CORRECT! Easier to become a major sports league player than a successful trader.
Dr. Rachel Abramson, PhD
Thanks Jeff. I provide three talks on the psychology of share investing. The talks are based on the findings of my Ph.D. Based on the conversations I’ve had on my PhD topic (not necessarily in my three talks), it is clear to me that people do not really understand the difference between trading or investing. Moreover, they think investing is ‘gambling’. Yet, it is trading that is the ‘gamble’, especially if you put your money into something, in the expectation that the market for this something will rise (and therefore you can capitalise a gain). If you don’t really understand the underlying product, and/or you haven’t properly researched it, then you are taking a gamble. Just because something has increased in value (read purchase/sale price), does not mean that it is an investment. It is still a gamble, if you are just following the market for the next ‘great new investment’. This is why we have had the tulip bubble, the internet bubble, the great depression. ‘Investors’ are happy to enjoy the ride up, but are stunned that there is a ride down each time. The reason this pattern continues is because those who get on the bandwagon to enjoy the ride up this time, weren’t ‘there’ for the last one.
I actually disagree with a lot of the comments in here. I think Bitcoin and Cryptos have been the easiest investment I’ve ever been involved in. And I say investment because that is what I’m doing, investing and holding, no trading here.
1. Remove the risk by only investing what you can lose and literally not have a care in the world about it.
2. Don’t watch it every day, just put some cash in daily, weekly, etc. and don’t watch. This is for investment only, not trading.
3. When you ignore #2, which you will, be discipline and remember it’s totally ok to lose all of the money. You already budgeted so it was ok.
4. Since you’re ignoring #2 and you’re seeing the downs in the market, take the extra beer or starbucks cash you were going to waste and buy more on those down days. Again, you’re never spending money you don’t have to waste.
5. Remember that the only people who lose in investments are those who sell. Remember 2008, 2009, 2010? Those who exited the market during the crash lost, those who road it out and even better, bought while everything was on sale, they won.
This isn’t rocket science, it’s a technology that will change the way we operate. You better be paying attention to it, because whether it’s Bitcoin or another altcoin, it’s not going anywhere and user adoption is going through the roof.
Thanks Jeff for the reminders! working on my site this month to improve it.
Thanks Jeff. I with a background, and degrees in Economics, I agree with what you shared. I also preach to my clients that they should not invest money in cryptocurrencies that they cannot afford to lose.
Wow Jeff – I guess this is a semantic argument, but to me you’re not a trader unless you’re watching the markets and buying on lows and selling on highs to increase your holding. It is absolutely possible to invest in Crypto without trading (by my def). My strategy is to invest on a dip, take out my original investment when the investment has doubled in value so’s I then have none of my original capital at risk and then just leave it, until I decide to cash out into fiat.
Secondly to talk about Crypto and Bitcoin synonymously is highly misleading. There is a huge difference between a new cryptocurrency ICO and a token which is solving a real problem. I guess the latter might come under your definition of investment. Many of the crypto tokens are solving real world problems which can’t be solved by other tech. Some of these will skyrocket imo.
That’s just my tuppenyworth. Do your research and buy coins and ICOs that have real potential. The fact that investment funds are getting involved is, to me, a great sign that this market ain’t going away and should form a part of any investment portfolio. #notfinancialadvice
Thank you, thank you, thank you. Jeff, I appreciate you sharing your insights and hope people listen to your sage wisdom!
Do you know that you can lend Bitcoin to traders and earn interest … that’s investing 😉
Those of you investing in the Bitcoin market will find out, in time, if you are an investor or a trader looking for quick money. That will occur when the Bitcoin, etc. markets “tank” as they certainly will do. If you’re an investor, you will stay in that market. If you pull out, (usually in a panic) you’re a trader. Having been a long time investment adviser (now retired) there is an old adage, “pigs get fat, but hogs get slaughtered”. Jeff knows what he is talking about, so be careful out there!
Speculation/Trading; Short-term attempt to profit mostly from focus on price movement without necessarily understanding the ‘business’ or fundamentals of the investment. Player needs to control fear & greed emotions (no doubt Jeff’s coaching focus) so as to make rationale buy/sell decisions.
Investment; More like buying into a business…which you would only do if you have done your due-diligence, understand the business’ growth and risk factors, and, compared to other investment opportunities, represents the best risk/reward. Given that short-term factors create “noise” re price fluctuation, the attention is on the medium-longer term increase in value of the enterprise which eventually shows up in the price of the investment. Held until better better use for the money or the investment thesis deteriorates.
Very interesting conversation. Growing pains of future investing and trading.
Jeff, so true. Trading is the hardest easiest job you will ever do. That is why you should do it with a computer. Let a computer tell you what to trade.
Very comprehensive video. I believe most people in the Bitcoin market are traders looking for a short-term attempt at profit. How many people are in it for the long haul? Time will tell. I could be wrong, but I was trading when I first got into Bitcoin and there seems to be a similar tone in most of what I read online.