Mania to Mania

“Russell rarely played the stock market and had little investing experience when he put around $120,000 into bitcoin in November 2017.”

This comes from a CNN money article, Bitcoin crash: This man lost his savings when cryptocurrencies plunged. From January 2017 through the peak in early 2018, Ethereum gained 16,915%.

Any time you have something go vertical, you just know that some people are going to get swept up in the mania. This is how the markets have always and will forever function. Jamie Catherwood, writing on the same subject today, said “Repeatedly, and assuredly, investors move from mania to mania, sacrificing long-term gains for short-term speculations.”

Ethereum is now nearly 90% off its peak in February (remarkably still up 2,000%) since beginning of 2017.

Today’s Ethereum is Tilray, a Canadian Cannabis company, which went public in July, and is already up close to 500%. This is sure to attract the same type of people looking to get in on the next big move.

Tilray recently reported that quarterly revenues doubled y/o/y to $9.7 million. 100% revenue growth is great, but the thing is, it now has a market cap of $11 billion with $28 million in sales over the last twelve months. Macy’s also has a market cap of $11 billion, and it does $70 million in sales a day. I know this is comparing apples to marijuanas but still, you get the point. Animal spirits has clearly taken over in this example.

There’s nothing wrong with wanting to get in on the action, but if you’re going to invest recklessly and just fling money into something you know nothing about, don’t be Russell. Only invest money you are willing to light on fire.

The unfortunate reality is that people are going to be people. Nothing can teach you the dangers of getting caught up in a frenzy like experience, and some people have to just learn these lessons the hard way.



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