Qualities of a Successful Investor
There is an interesting, if unexpected, side effect to being successful at anything, but particularly in finance: you get advice, and lots of it. You read that right, I am offered advice on crypto investing on about a 10:1 basis with regards to how many times I am asked for my opinion, and with crypto going mainstream, everyone thinks they have an edge, because everyone has made a little money.
My email address and other information being public I get emails a few times per week pitching me with “the new ICO” from completely random people who just want to help, and get a small cut of profits. The more interesting anecdotes however, fall closer to home. My parents know I am a crypto investor and have a general idea of which coins I hold; so a few weeks ago I installed the Blockfolio app on my dads phone and now my conversations with him go like this:
Me: Hi George (I call my dad George)
Dad: Did you know Ether is climbing higher than Dash today?
Me: Yep, where’s mom?
Dad: Dash is up 10% and Ether is up 23%.
Me: I know. Wanna go for dinner?
Dad: What do you mean you know? You should sell your Dash and buy Ether! Etc.
Now I am not picking on my dad, there is a point to this story. The point to this anecdote is that you have to develop a certain temperament as an investor, very few people are born with it, you have to nurture it. Two traits are important to all kinds of investing, one is detachment from the object (money) which is the reason you play with chips as opposed to bills in Casinos; and a dogged, but reason based self-confidence.
Because it is easy, when an investment is fluctuating (and this is not just crypto, any investment), to decide to sell/buy when the fundamentals have not changed, because “it’s going down (or up)”. And this “it’s going down (or up)” excuse is a perfect example of both types of failure.
The first failure arises because we are overly attached to our investments as “dollar bills today”. This means, that as we keep an eye on the daily gyrations of the crypto market; we keep a running tally of how much, in dollars, our crypto has gained or lost us at spot trade price now. “I just bought a lambo,” “I just lost that lambo”.
Investing is about putting “today” dollars to work so we can spend more dollars in the future. You have to keep this perspective and avoid the day to day ticker. You have to stop looking at your crypto as dollar bills but rather as tokens you are allowed to exchange only in the future, for (hopefully) more dollar bills than you started with. Barring special circumstances those tokens should not (in your mind) be redeemable until either the fundamentals of your coin change, or you have reached your investment objectives.
The second failure is a consequence of information overload. As crypto enthusiasts we are bombarded daily with a hack/collapse/new partnership that will make or break some crypto; and we are filled with self-doubt. We have to be confident in the work we have put in prior to committing to wedding an investment. I genuinely don’t care if the Pope himself calls me and tells me that Dash will go down and I have to sell it and buy Ether; if I am to be successful as an investor, I have to have the strength of character to trust my own opinion, even in the face of media/family/other investor expertise. I have to trust the work I put in up front.
Crypto investors are a wild bunch. We watch with bemusement when the mainstream media go crazy over a 5% fall in the SP 500. People start jumping off of buildings at declines of 15% or more. This is our bread and butter. But the same qualities of character that keep an experienced investor anchored to the floor in a Wall Street panic, are the same ones we as crypto investors have to cultivate to be successful. Reasoned self-confidence and a healthy detachment from day to day pricing madness will get you a long way.