There’s a lot of pain and angst these last few days.
I’m a very empathic person, and I feel it when people are suffering.
So I’d like to share a story to help you zoom out and realize that what we’re going through has happened before, and if you can play the long game, you’ll be better than just survive, you might even thrive.
Most people don’t understand there’s a game being played.
The game of money is as old as money.
Those who have the most and make the most have simply decided to master it.
First, you have to accept that it is a game, and decide to play it.
Next, you have to understand the rules.
Then, you have to decide on a strategy that allows you to play to YOUR strengths.
And stick to it until you see results.
If you can do that, then you are able to win.
You must plan to win.
You must expect to win.
You must stay the course.
My great uncle understood this. He bought shares of Standard Oil and Bell Telephone during the great depression.
Great companies with strong fundamentals and leadership that added value.
He left them to my grandfather with simple advice. Never sell. Forget you own these stocks, and just let them do their thing.
He listened to the rules and decided to play the game as his uncle had taught them.
My grandfather never earned a tremendous amount of money in real estate, or selling insurance, or being a fire chief, but by the time he left the money to my father, it was around $2M.
We had to play Sherlock Holmes finding all the money, which had become 25 different stocks in brokerage accounts all over the US by the time my Grandpa was in his 80s.
My father did his best to play by the rules, but he ended up selling a lot of the stocks to fund his lifestyle.
He only half played the game.
Then 2008 came.
In 8 years between getting the money and his death, it had cratered by more than 80%.
The only two stocks remaining were Exxon and AT&T, which have never again recovered their market share or reached higher highs in the 12 years since.
When you factor in inflation, they’re actually in the red.
I went a different way.
I decided to spend as much time learning the rules of the game and the strategies that work best from as many smart people as I could find.
I read all the books, I attended all the masterminds, I interviewed and asked questions and tried things, making and losing a lot of money in the process.
I had some wins, and some losses. And I learned.
I’ve been following crypto since 2009, and have been through all the big cycles so far.
Around the last cycle, in 2017, I realized that if I just stayed the course and kept buying solid assets through the bear, that I would end up ahead in the next bull run.
This is true of any market.
That led to me dollar cost averaging from 2017 through 2020 and up 700% by early 2021.
I stopped trying to beat the market and went with the natural cycles of things.
No trading, just dollar cost averaging, which anyone can do.
I stopped thrashing my arms, trying to make a wave happen, and just got into the waves as they were already happening.
Just make money, and invest.
Spread it around. Fill your safety buckets and your growth buckets, not just your risk bucket.
Don’t pretend you are smarter than you actually are. Everyone is a genius in a bull market and very quiet in a bear market.
Just stay the course.
If you’ve come this far, maybe you’ll be willing to come a little further.
As I have gone along my journey for the last 20 years, I’ve realized there are a few key principles and insights for investing that everyone should know, but nobody teaches.
I’m going to list them in no particular order, in the hope that they will serve you well in these trying times ahead.
1. Prices must fluctuate in order to create opportunities, but they generally go up over the long term. This is true of all markets I’ve studied, stocks, crypto, real estate. This is due to the value of fiat currency constantly declining. If you look at the chart of the money supply vs the stock market, this really starts to hit home.
2. Markets naturally move in greed and fear cycles. As Warren Buffett says, be fearful when others are greedy, and greedy when others are fearful. Right now there is blood in the streets and people are panic selling. I am doing the exact opposite. I expect to continue to do so over the next 12–24 months.
3. You are not the ocean, but you can ride the waves. Sometimes it pays to ride the wave into the shore, other times it pays to get off before it crashes into the reef. The difference is called discernment. You can make money on hype, but hype doesn’t last. In a perfect world, you would make money, invest into assets that have long term value propositions, and never sell. If you need more money, add more value and grow your business(es). If you need even more money, because assets are still tantalizingly cheap, OPM and collateralized lending is there to bridge the gap. The wealthiest people never end up paying taxes, they simply borrow, then leave the assets to their heirs at a new cost basis.
4. You must decide what your job is and do it well. Where you have the most control and the most skill is where you should focus your time — it’s much easier to increase income consistently than it is to hit grand slams in the market, with less risk. Especially as an entrepreneur, it’s all out there waiting for you these days. People need leadership now more than ever, and it pays better than any job possibly could.
5. Your job is likely not trading. 96% of traders do not beat the market. You are up against the best in the world and they have way more experience, intelligence, money and sheer computational power than you can muster. A whale (or pod of whales) can erase 99.9% of a poorly designed asset overnight.
6. You will get way richer way faster by focusing on increasing income vs just investing. Investing is important, but only when you have excess money to invest.
7. As your income grows, don’t scale your spending at the same rate. Maintain a comfortable, sustainable lifestyle, then take everything above that, invest. It’s ok to treat yourself and reward yourself, but wasting money or living beyond your means is an addiction, it’s ‘looking for love in all the wrong places’, to quote a mentor of mine.
8. If it sounds too good to be true, it is. Ponzinomics, tokens that have no business model behind them, or must keep printing in order to meet their demands and promises are doomed to fail. Platforms on the other hand, exchanges, collateralized lending and some other business models will survive and thrive in the new economy. If you can increase trust, decrease friction and add more value as a result of a business model, you will probably win.
9. The addressable market for blockchain solutions might be half of all current assets. That’s real estate, stocks, IP licensing, communities and many other verticals. This will take decades, and there will be a lot of pain between now and then, but I’m confident that is where we are going. It’s not the only bet I’m making, but it’s a big one.
10. If you can stick to your convictions and vision while everyone else is running for the exits, you win. If you can stay the course and stick to the plan when everyone else is reacting poorly, you win. If you can maintain control of your emotions while everyone is freaking out, you win.
11. “Keep your rules rigid, keep your expectations flexible, and every so often, continue to update your rules in light of new information.” — Mark Douglas (and me) I would add my mother’s advice onto this — ‘always have a plan and a backup plan.’
12. The wealthier you get, the more options you have, the more loopholes can apply for you, and the more opportunities come along. It’s important not to confuse financial success with financial sophistication. Double, triple, 10x down on what you know and continue to grow your income, don’t get squirreled out on too many opportunities all at once, because EVERYTHING comes with a learning curve, and costs tuition to learn how to do well.
13. If it sounds too good to be true, it probably is.
I hope this helps,
All best,
B
