Profitable pessimism or worthless optimism?
This post was originally published on Trademakers
In a recent discussion with a reader of my reports, he pointed out that although generally accurate, the pessimism was slightly(?) off-putting.
That was an entirely fair comment, and I took it on board and will address it in future reports.
On a very positive note, as I mentioned a few weeks back, I sold the remainder of my BTC at 28200. I bought this on average at 18200, so it’s a great return in a relatively short time,
I would have liked to have bought more at the lower level and held on to the stuff I sold at 23000, but I will not complain about taking a profit.
Do I want to get back into BTC? Of course, I do, but we’ll have to see whether that is higher or lower than present levels.
(Note: Considering recent developments, values might be getting a shove from banks who need dollars more than they need crypto, but that is just a conspiracy theory).
Gold has also held very well, so whilst I am not prepared to sell the physical, precious metal I have secluded away, I am pretty happy with the increasing prices. I bought the gold towards the end of 2021 and have weathered the rise and falls that we have seen since because of my continuous view that the outlook for the economy was pretty dire. Moreover, I will continue to hold this metal for the foreseeable future, as the economic outlook is not optimistic.
The BTC I started to buy scale-down under $20,000 because I believe in its future.
In 2021, the prices were crazy! Commentators were outrageously optimistic about the potential upside, and buyers bought because of FOMO, which is when your emotions take over, and your brains go out of the window. As we saw, lots of people lost lots of money.
But then, when prices broke below $20,000, most of the community – if they hadn’t given up on crypto – forecasted that BTC would get down towards $10 or $2,000, with some, who were bullish at $60,000, suggesting that the game was over.
Because of their pessimism about what remains an important product, I chose to start buying.
Luckily it paid off. And ultimately, it’s always about the payoff and the profit!
I do not issue trading recommendations; I do not write to generate gas or commission for the guys who publish my reports. I write about looking beyond today’s optimistic or pessimistic stories and encourage readers to consider the big picture. Which often involves repudiating an optimistic or pessimistic narrative of little value.
Keeping out of cryptocurrencies when it was trading over $60,000 was not the only thing I managed to do. I have avoided equities and bonds because the economic outlook didn’t suggest that these products offered a decent risk/reward. Indeed, the risk remains large when there is massive debt and an impending recession or depression.
Those that need to generate commission income will always optimistically promote trading ideas in equities or bonds because that is the focus of most investors. Or, more importantly, that is how they earn their income.
Every coin, token, or NFT promoted is the greatest thing since sliced bread in the crypto arena. Every coin has massive potential, and the well-scripted videos and massively optimistic white papers have caused many young investors to fill their wallets with a lot of digital data worth very little.
It comes down to something I was taught early in my career. Never promote a product or idea you do not believe in. When you give ideas to other investors, you will only sometimes be right. That’s just how it is.
Therefore, before you give out an idea, you must believe what you are saying, have some research to support your opinions, and always be honest about your views.
Sometimes it is difficult or dangerous to sell certain financial products, and going short of a product is generally alien to most new investors. That’s why most salespeople spend 90% of their time convincing you what to buy.
In the financial sector, we make a lot of money and build careers by selling ideas and products; we need a positive outlook to do this.
However, there are times to take risk off the table. Sometimes, you should position yourself to protect what you have rather than buy the dream someone is selling you.
Protecting yourself doesn’t mean avoiding financial products; because money in the bank, doing nothing, will shrink rapidly, especially in an economic climate like today.
As I have said regularly in my reports, first, you must try to understand your economic environment and then position yourself accordingly. Once you know where you are and position yourself comfortably, you can take advantage of short-term anomalies to add value to your portfolio. Or invest with a fund which will be more active than you can be and let someone more qualified do the work for you.
I may have been pessimistic about the outlook for over a year, but my pessimism has proven well-founded.
Potentially, my readers have saved money by not getting sucked into investing in areas which have proven disastrous.
Moreover, as I have done, I hope they are still adding value to their portfolios by going against the continuously optimistic sales pitches.
As an investor, what matters is appreciating where the economy is heading and thinking about what you can do. Once you understand the future direction, you must act proactively to profit from it.
Until next time.
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