My number one goal in investing is...
Probably not what you think
My number one goal in investing is dead simple: don’t blow up. That’s it. As I alluded to in my first post, right now I’m sitting on a pool of capital which won’t raise any eyebrows at the country club, but with enough time this money could metastasize into something impressive. But not if I blow up…
Plenty of investors (and even more so traders) talk about blowing up and the lessons they’ve learned from their unsuccessful forays into the jungle of twisted capitalism. If I can let another person’s mistakes save me a lot of money, so much the better.
How are you planning to avoid the blow up?
Pretty simple stuff, really.
Don’t make large bets on assets that I don’t understand. I’m going to make a large bet on Ethereum soon, but it’s an asset I understand front, back, sideways, and upside down in a mirror.
Don’t use leverage.
Don’t chase the market or follow the herd.
Don’t double and triple down on a losing position.
Don’t go to Vegas and get blackout drunk with a Russian named Demetri.
And so on, and so forth.
So you haven’t blown up yet?
It depends on how you define “blowing up”. In January of 2017 I put my life savings into crypto and by the end of the year I’d quadrupled my money. I was sitting on a position that was perhaps roughly equal to all of the money I’d earned working in my entire life.
Let me tell you, I had a spring in my step that winter.
Then the markets turned. Eight months later I was down 90% leaving me with less money than I’d started with. Losing almost everything was significantly less fun than making everything. Does it count as a blowup? Dunno. I never booked any profits or losses. Fugayzi, fugazi. It's a whazy. It's a woozie.
Whether the experience technically counts as a blowup, I can assure you I’d rather never repeat it.
Any other goals?
Ultimately I want to earn enough money to live a simple life in America. Mercifully my family lives in an inexpensive part of the union, and I’m OK driving a used car.
I also think it would be cool to become an accredited investor.
Those goals aside, I think that if I focus on preserving my capital, the growth of the capital will take care of itself.