“There’s a little child inside all of our brains that can’t stand to watch other people riding a money train that we’re not on.” I wrote this in June 2017 when Bitcoin was all anyone was talking about. It was hard not to get swept up in the mania. That’s what bubbles do. They suck us in. The other thing bubbles do is they pop, which is where we are today. Bitcoin is down nearly 70% from its peak.
I take no joy in the fact that people are losing money, but hopefully they will have learned some important lessons that will allow them to avoid the following mistakes in the future
- Do your own homework. Don’t take tips from anyone. I’ve never had somebody say to me, “Hey my friend recommended I buy this stock and now that I’ve quadrupled my money, do you have any advice?”
- There’s nothing wrong with gambling. It’s fun, I enjoy it. But be responsible. If you’re going to take a flyer on a stock or a coin or anything else, keep it small. Only buy what you’re willing to lose.
- Be wary of hucksters. How to turn $50 into $50,000 is always and forever will be bullshit.
- Don’t brag to your friends and family about how much money you’re making, because the only thing worse than losing money is somebody else losing money because of a tip you gave them.
- Take profits. If you buy something and it goes up 500%, it’s okay to miss out on further gains. There’s nothing like playing with house money.
It seems obvious now that the Bitcoin bubble would pop. Take a quick glance at some of the stories below.
January 2016 – Now there’s a Mike Tyson bitcoin app
December 18, 2017 – Small-cap Longfin soars 2,000% after acquiring blockchain company
December 18, 2017- Bitcoin investor went from poverty to launching a hedge fund
December 21, 2017 – The Can’t-Lose Way for Your Business to Pop: Add Bitcoin to Its Name
January 13, 2018 – Everyone Is Getting Hilariously Rich and You’re Not
December 20, 2017- How To Make $700,000 with Penny Cryptocoins
The stories were great, the tweets were better.
— Floyd Mayweather (@FloydMayweather) September 18, 2017
After asking where I️ work, customs agent at LAX just asked abt crypto. Said his friend took out $35k HELOC to invest. What do I️ think? Hmm.
— Neel Kashkari (@neelkashkari) November 22, 2017
Hindsight always makes the past look inevitable. Doesn’t it feel very obvious now that Bitcoin was destined for a crash. Well, yea, but did you, or do you know anybody that made on the way down? I don’t.
“It’s always better to learn from the mistakes of others” sounds good, but that’s just not realistic. Read all the history you want, but nothing can prepare you for to you how it feels to quintuple your money and then give it all back. Some mistakes we just have to make on our own.