Stick to your own rules is what I learned from the markets in the past seven years. I have posted and justified my investment decision into Ethereums one year ago on this blog and I want to share my thoughts why I have decided for myself to quit my engagement into Ethereums, take my profits and carry on till the next interesting opportunity arises.
First of all I want to point out that I do not question the concept of the Ethereums in favour of Bitcoins since I still believe that Ethereums are by construction a far better and smarter code than Bitcoins are. Nevertheless the rapid growth since my long position I have opened last spring at 11€ earned me 1245% in one year of return since I sold this morning for around 148€. Even though I believe in the concept of this currencies I can not justify the added value and therefore I do not want to be invested in something which is driven by new market participants who try to speculate on that asset.
I do understand the valid point that companies come up and try to build businesses on the chain to connect the currency with the real world economy. I joined the hype train with the early stage DAO IPO with 500 Ethereums which in the end summed up into a big loss due to a hack. Therefore I decided for myself to stay away from companies which are settled on the blockchain as long as there will be no regulatory committee similar to the SEC which can guarantee or at least overlook the validity of exchanged business shares. Even though I believe in the great ideas and the concepts of those companies I still value the gap between idea and realisation as too big to justify my position in Ethereums. Respectively a pure price increase based on a speculation would require another 16 billion U$D to double my position and this is something I do not want to expose myself to since the additional gain is marginal compared to the jumps from 11 to 22 to 44 to 88 and to 148 which required far less additional fund inflows.
I remember myself when I was 19 freshly done with my A Levels working for a joke of 8€ per hour for a manufacturing company for 3 months earning around 3500€ during that time. From the time perspective it was probably the most inappropriate period to get in touch with trading and the markets in general considering that it was the time of the crisis with the greek debt. I opened the my first brokerage account and started margin trading. I did great for the first two weeks earning returns with the turnaround of Conergy (solar panels). I believed in my brilliance to be smarter than the whole market really quick and traded all the different assets which my broker offered. I think I hit the first margin call after a month after I almost lost everything on a stupid Portuguese bond. In fact I was obviously upset that I lost the money but what bothered me most was the time I lost doing that stupid monkey work for three months with factual no reward after my trading adventures. I also learned an important topic on liquidity management since it turned out that the bond turned around but I had not enough cash to finance the position while it traded against me.
Why am I telling this story and what does it have to do with the Ethereums? I learned very early and very hard that greed is punished by the markets in a brutal and quick way and every trade can be seen from two perspectives. Assuming that the Ethereums will grow from that 148 I sold them for. On the one hand I can say look at this they are peaking at 300 I could have doubled my money, I am so upset that I quit that position. On the other side I can say look I entered the market at 11€ and sold my position for 148€ thats more than most of the professional traders and managers return on average, I am a fucking cool guy. I am referring to this since I went through this thoughts when I first invested in Bitcoins making a lot of random and wrong decisions selling the remaining bit for 250€. On peak I owned 998 Bitcoins and evaluating their price today I could call myself a millionaire.
Looking from today into the past everything makes perfect sense and people are telling me why didn’t you just hold your Bitcoins? Actually nobody can experience what it means to buy an asset with almost all your money for 30€ watching it growing overnight to 150€ dropping to 120€ and back to 70€, the main exchange getting hacked, the main European exchange owner taking the money and disappearing, if you didn’t go throw this with your own money, believe me you have no fucking clue what you are talking about. Putting this into perspective I can be happy that I earned a respectable amount of money with those Bitcoins, since I know people who lost everything they invested, even though I am still not a millionaire. From the point of investing the future is uncertain and I am right now over the what would have happened if question with the Bitcoins and appreciate my outcome.
Based on this I have decided to reward myself for every positive idea I had and I will buy from a small part of my Ethereum returns a nice Vinyl Player since I am very interested in this topic for a few weeks now and also send my grandma on holidays since she became very careful with her finances since my grandpa died even though there is no particular reason for this considering her assets. Even though the Ethereum price might hit 300€ or even more I wont regret my decision since I will listen to my favourite track on my Vinyl Player and view some pictures of my grandma in a five star hotel enjoying her last years on that planet.
I would like to end this post with an idea I found in one of Kostolanys books. He figured that when common people start talking and recommending investment ideas there is a good chance that the market might face a turnaround. Considering the noise around Ethereums and the crazy volatility increase during the last days with opening closing spreads of 30-40% I don’t want to hold this position but I will definitely invest a smaller proportion of the proceeds in the case of a price drop into a range of 70-80€.