Please click the link to listen to the eighth episode of my weekly crypto chat podcast. These are intended to be short, single-topic ramblings on some aspect of the cryptosphere. Comments and critique welcome.

https://soundcloud.com/gordon-buckley-272399028/the-patient-investor

Transcript

Two Minute Crypto – The Patient Investor

Welcome to two-minute crypto – for today’s episode I’d like to explore the role that patience plays in successful crypto investing.

Warren Buffett famously said, “Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”

Now we are all aware that Mister Buffett has little love for crypto. Despite this, his investment thesis remains just as valid. As an investor, you need to be patient in order to reap the full rewards of your capital outlay. Be patient, so easily said, none would likely disagree and yet….and yet remaining serene through the highs and lows of crypto investing will test the resolve of most people. Unlike the generally stately, at times almost sedate procession of price discovery in the stock market or even leading Forex pairs – crypto is a lurching, at times, violent beast – it is the embodiment of volatility. Monday’s Bitcoin’s price action being just the latest example.

When I say I invest in crypto for the long-term – I mean a 7 to 10-year horizon. Sure, I exit many positions much earlier than that, but nonetheless, that is my standard expected time frame. This is no different to any share I buy. If I deem something an investment – then it is by definition: a multi-year position. In the frenetic world of crypto, a month can seem like a long time, a year an eternity but this is something of a mirage. Adoption over time that critical ingredient to value accumulation and retention; is likely years away. For some sectors such as cross-border medical records and large democratic political systems perhaps even longer.

Remaining, calm – holding on to your positions while at the same time remaining engaged in the cryptosphere, is a daily juggling act requiring a near constant reaffirmation of your investment goals. This stands in stark contrast to a typical blue-chip stock investment where months might well pass between one position reassessment and the next. Perhaps a fairer comparison would be investing in a mineral exploration company whose very existence is contingent on finding ‘gold in them there hills’. I’m sure many of you have invested in such projects but generally as outliers, high-risk elements within more balanced portfolios. Crypto, however, being so early to market, is basically an entire asset class of explorers searching for vast but hidden value.

Acknowledging the high-risk nature of blockchain projects doesn’t necessarily make them any easier to hold on to. In this context being a patient crypto investor demands far more Zen-like qualities than are typically required. Something I’ll discuss in next week’s podcast.

I’ll leave you with a quote from the 2nd Century Roman Emperor and Stoic Philosopher Marcus Aurelius:

You have power over your mind – not outside events. Realize this and you will find strength.

Thanks for listening.

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Responses

  1. Paul Oluwanisola

    Wow! Nice work here man. Patient is a key ingredient to succeed in the cryptoverse, couple with some level of tolerance to restrict those freaking irrational emotions.

    The quote did well to sum it up. Just as your writing was on point.
    “You have power over your mind – not outside events. Realize this and you will find strength”.

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  2. Roberto Candusio

    Thank you for the nice article!
    I agree that to be patient it’s important and that the horizon for an investments in crypto is in years not months or weeks.
    However in cryptos just holding doesn’t make any sense.
    We need to continuously reshape our portfolio because the technology is immature and it is going to evolve and the Crypto market will be completely different in 3-5 years!

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    1. CryptosDecrypted Post author

      Thanks, Roberto. I see your point, the crypto market is evolving very quickly and will be profoundly different in 5 years or less. However, I do review the fundamentals of each crypto investment on a monthly basis, and liquidate the position if I believe my original investment thesis no longer holds (say for example – the project is repeatedly missing key deadlines with no meaningful communication as to why coupled with evident lack of development etc.). I still find it useful to view my crypto investments within a very long-term horizon as this greatly eases ‘rising above the babble’ of the cryptosphere.

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  3. Tony Lee

    Nicely written up mate, the patient investor in real time works but Cryptos im not so sure. 1 Day = 1Week, 1 Week = 1 Month, 1Month = 6 Months and a 1/4 = 1 Year. The new Crypto milenials expect everything to moon or 10X unfortunately this far from reality.

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    1. CryptosDecrypted Post author

      Hey Tony, thanks and congrats on the Worbli comp – well deserved. I agree that crypto moves at speed, but I still find it very useful to think with a multi-year horizon as it keeps me ‘in the game’. I review each investment on a monthly basis (from a fundamental perspective) which is 4 times more frequently than I check any stocks I hold. Certain, key players like BTC – are profit target set and forget. I also day trade crypto, a whole other thing of course. Cheers

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