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Market Brief – Alice in Cryptoland

“Oh my fur and whiskers! I’m late, I’m late, I’m late!” –The White Rabbit, Alice in Wonderland

Patience is a virtue most of us struggle with daily. Sitting in traffic, getting in the slow checkout line at the grocery store, or even waiting for a slow website to load can now frustrate us beyond belief. Our world is moving faster on so many levels that it’s difficult to fight our expectations for instant gratification. This desire for instant gratification has trickled into the investment world recently. Nowadays, it seems like everyone has their secret to becoming an overnight millionaire. You have seen some newly minted Cryptonaires or WallStreetBets speculators that have hit it just right and have (for this moment) been hugely successful. It can be difficult to fight the FOMO (Fear-Of-Missing-Out) as stories of instantaneous success can lead to us down the path of chasing the fast money.

We caution against chasing these themes too much. Or, at the very least, understanding the difference between speculating and investing. Investing is building long term wealth. There are many ways to invest successfully, but historically speaking, a long-term perspective is required. Speculating is on par with gambling. People can gamble and win millions as well, that is what Vegas sells so well, the possibility of being the one in 50 million that actually wins. This concept of preying on our desire for the quick fix is nothing new. Its existed for millennia since we, as humans, are tempted by the promise of quick returns: fad diets, pyramid schemes, the lottery, penny stocks, and yes, even Vegas, all tempt us by the tantalizing promise of doing something the easy way. But how many times has the quick and easy way really paid off in the long run?

The snake oil salesman promising to fix all your ills with his elixir now comes in easy to digest videos conveniently accessible online! It is tempting, as you see others attain rapid and incredible success, to feel you are being left behind and need to act. Especially as some of those who have hit the jackpot are being rather loud about their success and recruiting you to join them and warning you that you will be missing out. But as Hungarian trader Andrè Kostolany said eloquently, “I can’t tell you how to get rick quickly. I can only tell you how to get poor quickly; by trying to get rich quickly.” Following fundamentals and a disciplined investment strategy can seem boring and too slow when some investments are generating incredible wealth at astonishing speeds. Temper your desire to follow the quick fix by remembering that “wealth” is not wealth unless they actually sell it and realize it. Investments that go up 1,000% quickly, can drop 1,000% just as fast.

I believe in Crypto and Blockchain, but it’s an emerging technology that will go through many changes over the next decades as it is integrated into everyday life. Bitcoin is just one type of Cryptocurrency, it could emerge the winner, or another competitor could pop up. However, I see it as an alternative investment and not something you should put all your wealth into with the hopes of instant success. Have a purpose behind your investment philosophy, and I hope that purpose isn’t well everyone else is doing it!

 Earlier this month the Wall Street Journal had a good article that we shared on LinkedIn and Social Media with the above Kostolany quote. Follow us for more frequent updates, you can access our LinkedIn here and Facebook here!