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Ryan: So you've looked at companies that are huge companies, you've examined much bigger marketcap type scenarios. Do you feel that that experience has assisted you? Or are we in such, kind of the infancy, that as you discussed, it is nearly just common sense. You simply need to sort of appearance at it and believe rationally about what's going on, and pull the feeling out? You have to pull the feeling out, and there are no traditional metrics that you can take a look at.
Okay. What I can utilize that I discovered from dealing with Wall Street throughout three years, is how to read individuals - So I believe that's probably one of my incredibly powers, if you will. And if you have actually got an excellent BS detector, you ought to listen to it. Okay. You ought to definitely listen to it. If I'm sitting down and I'm talking with someone, and they've got all the bonifides, but you know, there's simply; it's not agreeing with me, there's something about them that's not sitting well with me.
There are numerous other offers out there to look at. Yeah, there's excessive opportunity. Yeah. And speaking of opportunity, you understand, you sort of pointed out at the start, Bitcoin and Ethereum, most people have become aware of these two, especially Bitcoin, since it appears like it's in the news all the time, something or the other.
Have they failed on Bitcoin? Bitcoin is trading almost upwards of $6,000 just recently; it's turned up from say $3,000 not too long earlier, it's rather unpredictable. Do they sort of await a pullback, or do they simply state, "Okay, I'm going to buy some Ethereum, I'm going to purchase some Bitcoin, see you in ten years." You know? Yeah that's a terrific question.
You can actually utilize tiny stakes, and transform them into life-changing quantities of money. So I believe the first action is, get clear on, if I lost all this cash tomorrow, if I put it in Bitcoin, I wish to make sure that it's not going to have me asking my parents for hamburger cash, and sleeping on their sofa.
And after that on the very first 50% pullback that you see in Bitcoin, buy the 2nd half. Which way you're not going to get the perfect cost, but you're going to get an excellent rate. And after that just leave it alone. And to your question, is it far too late to purchase Bitcoin? Definitely not.
Right now it has about simply under a $100 billion market cap, so it's a 10x from here. undefined. So you put $1,000 in, you turn it into $10,000. I mean, I'll take that all day. A bit easier in cryptocurrency than choosing up Apple stock. Correct! And you spoke about this volatility.
Implying that Bitcoin has to do with 10 times more volatile. And they believe that as it becomes less and less unpredictable, it's going to be much easier to really depend on as a currency. Correct. Now, we're in an age where news, whether you call it FUD, fear, unpredictability, doubt, actually drives the costs of these cryptocurrencies up and down it looks like.
Much more, to a level, than the stock exchange. Since there are larger gains and bigger drops. Do you feel that the marketcap needs to go approximately assist control that volatility? So that there's, it's spread out wider? Do you feel that the news needs to turn favorable? What do you feel is going to help reduce that volatility, which in turn will result in more widely accepted use of a real currency? It's kind of like the chicken egg thing practically, but there's got to be some point where it transitions ( And it reveals that you really do understand the area asking that concern. So typically the life cycle of originalities is that it's the speculators and the early adopters that initially enter into it, before it enters into mass adoption, and then becomes what we would consider real innovation, right? Right.
It went from pennies to a hundred and modification, and then back to like, five bucks, and now it's overcome a half a trillion market cap. Yeah. So what you'll see is a similar circumstance with Bitcoin. Now we also saw Bitcoin go from cents to $1,200, back down to $200.
It's now in its phrase of going into its mainstream phase. Now, in order for it to be a currency, you're right, the volatility has to reduce greatly. And it can't diminish significantly until it gets actually above a trillion market cap. Okay. So the concern is, what takes it to a trillion market cap if it can't be utilized as a currency? And it will be speculation that gets it there.
And so, as institutional money begins entering the market, which is what I prepare for will occur in 2018, and I'll inform you why I believe that in a minute, that speculation will be self-reinforcing, and it will take Bitcoin to the point where volatility will come way, method, way down, and all of a sudden, it's now something you can use legitimately to pay earnings and buy things and really utilize as a currency - It's more of a speculative car that is likewise a warehouse of value. Mm-hmm (affirmative). Therefore when you take a look at, you kind of spoken about position sizing and going into in and looking for, I believe you pointed out a 50% pullback (undefined). You know, typical stock investors might look at, all right if a stock draws back, or the marketplace draws back 10%, it's a correction.
In cryptocurrency, I keep in mind not too long earlier, Ethereum, I seem like it went from $300 to ten cents or something in a day. That's right. However then, next thing you understand, it was back towards $400, and then it's pulled back. So the volatility ranges are rather different. Do you kind of think that, 'cause what I'm attempting to get at here is, there are people who attempt and time the market.
And what I'm attempting to figure out is, are you more simply put something in, if there's a pullback, put some more in. Yep. If it draws back even further, take a look at your position sizes. If it makes sense, possibly purchase once again. But do not get too caught up in the plus green balance in your account, or the minus red balance, you know? Since- Yep, 100%.
Yep, 100. That is the way to go, since we could have one statement tomorrow, and Bitcoin's $25,000, and then you would have missed it, right? Mm-hmm (affirmative). So get in, get your feet damp. Start with something that's not going to squash you if you're down 50 or 60% - Do not go put $200,000 in, and you're down 60% tomorrow, and you're prepared to leap off a building. Don't do that, that's simply not wise. Be rational, get your feet wet with this innovation. Know that you're not going to get a perfect print, right? Put your ego aside, toss it out the room, it's got no service here.
You will see a 50% pullback in Bitcoin at some time. Now we may go to $15,000 initially, before that next 50% pullback. However you will see one. So put your half position on, wait for the first 50% pullback, put your other position on, and strap in for the flight, 'cause it's going to be awesome.
Yeah. And that leads me to feeling. I trade alternatives myself, too, and for me, stock trading and particularly choice trading, fits my personality profile. I'm extremely unemotional; I'm disciplined, I try to find the very best, and after that go into the much better. I'm extremely strategic about it. However the average person as we know, is reactive, when it pertains to investing, they wish to buy Amazon when it's now trading over $1,000, and they desire to offer it when it's at $800, and purchase it back when it's at $1,200.
And I look at the same obstacle with cryptocurrency, except I see it on a more extreme level, due to the fact that it has an even bigger FOMO mentality. Where people have this fear of losing out, they think, I could have bought Bitcoin at cents, and if I would have purchased $100, I 'd have $70 million or whatever, you see these articles all the time.
That was probably not great." And I had actually done that numerous times in these much lower numbers. However back then these were revenues, right? These were real earnings. And who knew that it 'd be $5,000, $6,000, $20,000, whatever. So there is even a few of this internal FOMO of like, what's the next one? Oh, I've got to find it.
And beyond position sizing, how do you encourage the folks that you educate about cryptocurrencies to safeguard themselves from this FOMO, emotional spiral that can take place? Yeah, so again, a lot of the time, every other week I put out a video, and I talk a lot about rationality, being reasonable.
On our journey to producing wealth, it's not the government or someone else or our moms and dads who are holding us back, right? It's all up in here. Because cash does not care what color you are, it does not matter what school you went to; it doesn't care if you read well, or if you are excellent looking, or if you are awful.
So we bring all of our own drama to a development of wealth. So a few of the things that I do to assist us protect ourselves from that is diversification, to be simple enough to state, "Look, I could suggest a concept that could go to absolutely no." Therefore we need to be diversified, and the other thing that we do is we use something called uniform position sizing.
So I'll give you a prime example. I suggested a really, very small cryptocurrency previously this year at 13 cents. And I said, "Look, if you're a small gamer, probably put $200 to $400, maybe $500 max in it. And if you're a bigger gamer, you can put $1000 into it." Therefore that particular coin went to as high as $50.
Yeah, yeah. Right? So, I'm not going to state that every idea I look at does that. There are some concepts that haven't worked out. However when you have a portfolio of concepts, and you use uniform position sizing, a couple of things take place. One, you're going to get fortunate, best? You're going to have a couple of trades that are just incredible.
Even if you have 10 ideas with $500 each in, $5,000, for the majority of people, they lose $5,000, if everything went to absolutely no, yeah, it's gon na draw. It's not pleasant. But it's not going to put you in the poorhouse, right? You're not going to be sitting beyond Grand Central Station with your hat in your hand begging for hamburger money.
Since of the beauty here Ryan, you understand I get enthusiastic about this, you've got to forgive me, however the charm here is we're so early. Mm-hmm (affirmative). We're so early, that we don't have to be that brilliant, ideal? We need to be bright enough to have a core portfolio of terrific names, to have rational position sizing, and after that be brilliant adequate to do nothing however wait.