My Crypto Investing Mistakes and Lessons (‘20-‘22)

Hi Courtland,

Hunter gatherers knew to be conservative when all was well and only liberal in tough times when something new was the difference between life and death and you might get lucky. I think gut instinct is different. Stanley Druckenmiller says to go with your gut because markets move quickly and then follow that up by research because backing out soon after doesn't cost much. He also thinks one has winning and losing streaks and it's important to recognise those so you don't try to recover losses by betting more when your judgement is poor and you go in big when you're on form.

Anyway, what I've found most productive over the past couple of years was learning about the Austrian School of Economics as opposed to the Keynesianism beloved by politicians for our lifetimes. Its arguments seem like common sense; they build up from the constrained view of human nature, as defined by Thomas Sowell, to show how economies can best function and how they're corrupted.

We've lived in a corrupted financial system all our lives. Just because a system is older than us, we find it awkward to think it can be flawed or end but history shows the fiat-money path of the world today has always ended poorly for previous civilisations. Now, the problem is that something which has lasted over a hundred years might fail in three, ten, or thirty so calling the end is not practical. But what can be seen over our lifetimes is each bailout or similar sticking plaster needs to be larger than the last.

The USA's founding fathers knew not to have paper money and central banks; they'd seen the damage they cause and knew man couldn't be trusted with them; Sowell's constrained view again. The Federal Reserve is outside of the US Government as a workaround. Austrians will explain why a central bank isn't required and that having one corrupts the market signal on the price of money, i.e. how much it costs to borrow. This corruption leads to malinvestment: companies borrow money which is too cheap to make goods which aren't in strong demand. The economy overheats and contraction occurs. The price of money is manipulated to bring inflation under control. The malinvestment is purged by zombie companies which only survived on over-cheap money going to the wall. This boom/bust cycle is typical of a central-bank economy.

Talking of inflation, we should be living with mild deflation, as the West did in its glory years before the 20th century. Technological progress means things get cheaper, faster, better and a new device replaces more than one old one. This is deflationary. There is nothing wrong with mild deflation but we've been taught it's a dirty word which leads to mass poverty because Governments have debt and deflation makes them harder to pay off. Thus they have inflation targets to erode their debt, and savers' hard-earned savings. A 2% inflation target coupled with 2% deflation through advances means we're really experiencing 4.08% inflation.

As for Governments, most of the ones we have today are run by their employees for their benefit. This can be seen in their profile of income and outgoings and the change over time. As with a employee-run company, a prime aim is to pay the employees and not to sack the flabby excess, even when the money isn't available, thus chronic deficit occurs leading to growing debt. Because voters might grumble at this, many are co-opted onto the payroll as pseudo-employees of an ever growing state. Sticking with stereotypes, one party in government co-opts the feckless layabout and the other the fat-cat pensioner.

This doesn't mean no welfare without a welfare state. There used to be Friendly Societies providing welfare based on occupation, religion, location, trade union, etc. These were nationalised and with that the local knowledge of who was feckless and who was deserving went. One letter to 'The Oddfellows Magazine' at the time of Great Britain's 1911 National Insurance Act said:

‘Working men are awakening to the fact that this is a subtle attempt to take from the class to which they belong the administration of the great voluntary organizations which they have built up for themselves, and to hand over the future control to the paid servants of the governing class... This is not liberty; this is not development of self-government, but a new form of autocracy and tyranny.’

As for crypto-currencies, the only sensible strategy is to buy Bitcoin, with dollar-cost averaging if you prefer, and hold it for the long term. It's not a penny stock to be traded at the casino or pumped by a rigged house which always wins. Come back in ten years when it will either have gone to zero or have given a handsome return. It's a sound hard money for the Internet. It's as the gold standard was for the 19th century ending with La Belle Epoque.

Yes well said I agree with all of this. I especially find the comparison to running a startup interesting.

Everyone knows "buy low, sell high" but human instinct is very much the opposite you really have to be actively conscious of it.

Your conclusion is totally right.

Great returns come from leading the herd, not following it. Or at bare minimum, fast-following the leaders. This requires the chaos of ignoring your gut instinct for safety

You are describing the need for a plan and trading strategy, based on an observation in the market that is based on zero discretion “gut instinct”.

The problem is most people simply don’t have a strategy that works. Let alone the infrastructure to automate it.

I am working on the solution I wish I had when starting out.

I am building a product that provides users a simple way to trade a profitable strategy optimized for the crypto markets.

They are send as daily signals and tracks a virtual portfolio with backtest statistics to build confidence into the strategy.

You simply execute the trades yourself. I don’t have access to your accounts.

Courtland, I would love to invite you as an early adopter and give you a VIP treatment—all free of charge.

Totally! Many of these companies also have exterior motives or alternative income streams.

Long term investing is not the best tool for the crypto markets at this time.

Being skeptical is important. Long term investing in crypto is quite hard because of the volatility.

This is the problem for many new entrants in the crypto markets. They have a long term investor mindset and often come in with true-isms from traditional markets.

But there are definitely ways to make the most of a bullrun as aggressive as in crypto.

I have done the research and can confidently tell you this is NOT true for the crypto markets.

In fact.

Most market true-isms are completely false.

But many don’t have the tools to validate these assumptions.

I feel you. I have been there.

There’s a way to participate in the markets completely stress free.

The ride can be much smoother with the right approach and strategy.

I am looking for early adopters for a product that helps crypto traders with that.

Seems like you are on a journey to learn. I might have some more info for you, and looking for early adopters of a product to help crypto traders be successful.

No it’s not.

A question no one knows. There’s absolutely zero prediction necessary to be profitable.

The only thing we can do is observe and react.

If you are looking for a way to be profitable during the next bullrun.

I am looking for early adopters for a product that does exactly that.

I am solving this problem exactly and looking for early adopters.

Totally! Observing and researching are the first steps.

After that you need to learn the tools and processes to validate and test your assumptions in the markets.

Hi Bobby, Bitcoins transactions aren't quite anonymous, though I know what you mean. They're unregulated, that's a feature for those who need it and does marry with 'lack of security' as you claim. Transactions through Bitcoin are irreversible as time goes on, again another useful feature for those who want it. Do not send the wrong amount or to the wrong recipient. All your complaints against Bitcoin seem to be its features when compared to the current fiat money + Visa system. You may not need them, but many do.

There are so many scams out there. Sorry to hear it.

Can we please get some moderator attention on posts like this?

Naming a “genius” who will “help get back your bitcoins” then including their email reads to me like a scam AND a shill.