I’m starting a new series “Offbeat”, where I talk about random topics that come to mind in a much more casual writing style.
At the end of last year (2017), Bitcoin and cryptocurrency in general were going off. People were going crazy: there was a massive crypto bubble (even wilder than the Dotcom Bubble and the Tulip Mania of yesteryear). Check this out:
My mates and I knew we were right in the middle of a bubble craze, and we poured as much money into it as we could. I busted my ass for about 5 months working crazy overtime, pouring all my extra earnings straight into Bitcoin and other cryptos. I researched a tonne about each one, trying to pick which one seemed the most likely to double, triple, or even go up 100x in value. My mates and I wrote pages and pages of info about each crypto coin, speculating, theorising, trying to pick the next winner. We picked a few winners and made a few thousand dollars, and picked a few duds too. It was an incredibly exciting time to be alive; we felt like we were part of a goldrush.
Eventually I got my portfolio up to a pretty solid amount:Not bad. Not bad at all.
At the peak, I was sitting at a portfolio value of $26,454 Australian Dollars (and that’s after I’d sold a few thousand dollars worth of profit). Somewhere near the peak, my mates and I had a very serious conversation about whether we should sell it all (we knew the bubble would burst at some point and the crypto-fever would fade away)… or hold on for dear life and just let whatever happens, happen.
We talked about it over a week or two, and decided it was worth holding on. It was very possible my portfolio could go up another 3x in value or more (I’d already watched it increase by 5x over a period of a few months). That’d get me close to $100,000, at which point I’d sell half and keep the rest invested. That would have been a life-changing amount for me at the time.
And if the opposite happened and it tanked and I lost it all, well, that was worth the risk to me (and my mates). We agreed to keep it all invested and just ride the rollercoaster. We promised ourselves not to panic sell it all if it started to tank; we’d hold on for dear life.
As you can see from the graph, it definitely tanked in a HUGE way. Coins which had a value of $100 dropped to almost nothing (less than a few cents in value). I lost the vast majority of my portfolio. I sold a bit at the end (about $2000 in total) once it was clear it wasn’t going to bounce back. Watching it tank was sad, but I’d already promised myself I’d be ok with it if it happened.
Besides, it wasn’t really a true loss of $26,000 – as I said, I had already sold a bit for profit when it was near the peak, and at the very end of the nosedive I sold the last $2000 worth. In total I sold about $6,000 worth, meaning I only lost a potential $20,000 or so. (Still quite a lot, let’s be honest).
There’s a great saying:
“You made the best decision you could with the information you had available to you at the time.”
Hindsight is 20/20, and it’s really easy to point out a bad decision once all the chips have fallen where they may. But I’m more than confident I made the best decision at the time.
Do I think about the $26,000 I could have had? Yeah, of course I do. It would have paid off all my university debt and allowed me to get a hair replacement transplant, with some money to spare. I think about it from time to time.
But I’m glad I made the decision I made, and I’m glad I trusted myself enough to be ok with whatever would happen. I’m glad I had the balls to stick with my decision and not panic or become emotional/irrational. Training myself to be stoic is more important than any amount of money.
Moral of the story: Make a decision and stick to it. If you tell yourself, “This is the decision I’m making, I’m sticking with it no matter what, and I’ll have no regrets if it doesn’t work out” then you won’t beat yourself up if it doesn’t work out. At least you’ll have learned something, & become a more stoic, rational person.