In my three decades as a Wall Street executive and hedge fund manager, I’ve learned a lot of lessons. And one of the most important is to have the courage to stand by your convictions.
If you really want to be a successful investor, you can’t care what other people think. You have to rely on your own judgment. And I’ve done that again, and again, and again.
I did it in 2016, when I recommended a software project first developed by a kid when he was 17 (who, at the time, looked like he was 12).
I pounded the table, telling anyone in earshot the project would grow from virtually nothing to a $30 billion market cap overnight.
People thought I was insane.
I can’t tell you what it was like going through that… having people question your sanity, your professional ability, and your motives. It’s an awful experience.
But I did the research. And I knew this kid was the real deal.
His name is Vitalik Buterin. And the project was Ethereum.
When I recommended ether in April 2016, it was at $9. It eventually got as high as $1,432.
Every $500 in ether at that time would’ve turned into as much as $79,605. A $1,000 investment would’ve become worth as much as $159,210.
Friends, when I see an idea that makes sense and lines up, I no longer need other people to agree with me. I’ve been right so many times in my career when others told me I was crazy… that I’ve learned to rely on my own views.
Does that mean we go all in when I love an investment?
No, it does not.
The key is putting faith in your analysis and marrying that faith to a risk-management plan that keeps losses small and gains big. No matter my conviction on an outcome, I never bet the farm.
I’ve learned if you can focus on what I call “asymmetric” risk trades, you can invest in the most volatile assets in the world without putting your current lifestyle at risk.
How to Make Asymmetric Bets
Here is how asymmetric-risk investing works… Let’s say you have a $100,000 account that is 60% in stocks and 40% in bonds.
With asymmetric-risk investing, you don’t have to risk much because the potential payout is so huge. So for example, back in 2016 when I recommended ether, you could’ve taken just 2% of your portfolio (that’s $2,000 from our $100,000 example) and invested it.
If ether went to zero, you’d still have $98,000 in your account. And the fact is the interest you received on your bonds and stock dividends would have made up the entire $2,000 loss in less than a year.
That is the definition of a low-risk trade.
But ether didn’t go to zero. It got as high as $1,432, transforming your $2,000 investment into $318,420. Do you see how just a 2% investment in the right asset triples your entire portfolio value?
That’s why I love asymmetric-risk investing. If you’re wrong, the loss is no big deal. But if you’re right, you can move the needle on your entire net worth.
That’s been my approach with another one of my long-term picks: bitcoin.
Bitcoin Since the Halving
I’ve received a few emails from people asking me about the bitcoin halving. They look at bitcoin’s current price and think it hasn’t moved much.
Just so you know, the halving is when the new supply of bitcoin is cut in half. It’s hardwired into bitcoin’s programming code. So it’s 100% guaranteed to happen.
And the first two times this occurred (in 2012 and 2016), we saw bitcoin’s price go up 8,995% and 2,878%, respectively…
The last halving occurred on May 11. Since then, bitcoin is up 11%. That’s hardly inspiring. But here is what you need to know… Back on March 18, I pounded the table to buy bitcoin when it was at $5,200.
I said, “You’ve got to buy bitcoin. The halving is coming up, and bitcoin is going to move higher.”
And of course, that’s exactly what happened. You saw bitcoin go from $5,200 to $10,000. That’s nearly double in just seven weeks. If stocks or gold did that, people would be dancing in the streets.
Of course, whenever anything moves that quickly, it needs to pull back a bit. So we saw bitcoin drop to around $8,500. Then it waffled around, popping up to about $10,000 again, then back down to about $8,800 recently. And as of this writing, it’s trading above $9,500 again.
This is normal trading action for any asset that doubles in price in a short period of time.
The bitcoin price is probably going to waffle around a little bit more. It has to work through its resistance level at $10,000. Once it does that, it’s off to the races.
Friends, I remember dealing with the same exact thing during the 2016 halving. Bitcoin moved up right before the halving… and then came back a bit and waffled around.
Like now, people said, “Well, why isn’t this $10,000 already?” And I said, “Hold your horses, give it some time, it’s going to work through.”
At that point, the resistance level was in the $700–780 range. And then once it broke out, it went right back up to the old highs around $1,200.
Then it sold off a little bit; it was all the people that had bought it three years ago that were waiting for $1,200 to break even.
Then, it came down and finally, it went bananas. It went to $3,000, $5,000, $10,000, $12,000, $15,000, $19,000… It just went insane.
So we’ll see something similar take place again this time around.
The Beauty of Our Strategy
I want you to remember that bitcoin is the gateway to all other cryptos. So as people come into bitcoin, they get exposed to other coins, like ether. So what is good for bitcoin is good for the entire crypto space.
So if you put faith in my analysis and position-size correctly, the combination can create massive, life-changing wealth, without putting your current lifestyle in jeopardy.
Friends, my whole career is built around helping my readers take advantage of these asymmetric-risk situations. If we’re wrong, we lose a little bit… but if we’re right, we move the needle on our financial life in a way that no other asset possibly could.
Now, does that happen without any discomfort? No. The discomfort is volatility. You will have to sit through volatility that would make a grown man vomit.
But it’s the price of admission for the chance of making hundreds of thousands of dollars – and potentially millions – from tiny transactions.
So if you’re a believer in bitcoin like I am, then stick to your convictions. Ignore the naysayers (especially Goldman Sachs and its so-called “analysis” of bitcoin not being an asset).
Keep this essay handy. And when somebody comes out and says, “Oh, no one’s buying bitcoin,” or “Bitcoin is useless,” or “Institutions aren’t getting involved with bitcoin,” I want you to reread it. And remember, we’ve been through this before.
Let the Game Come to You!
Editor, Palm Beach Daily
P.S. As I mentioned, since the halving, bitcoin is already up double digits. And soon, it will be off to the races. And if you want to take advantage of it and move the needle on your life and net worth, there’s another emerging trend you should enter before it reaches its full potential…
It’s called blockchain technology. Not only is it the backbone of bitcoin, it’s also disrupting industries from finance to supply chains to health care.
In fact, I’ve put together a special presentation to pull back the curtain on this trend. I firmly believe it will be the No. 1 investment of the decade…