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Ryan: So you have actually looked at business that are big companies, you have actually evaluated much bigger marketcap type situations. Do you feel that that experience has assisted you? Or are we in such, sort of the infancy, that as you mentioned, it is nearly simply typical sense. You just need to sort of look at it and think logically about what's going on, and pull the feeling out? You have to pull the feeling out, and there are no standard metrics that you can look at.
Okay. What I can use that I gained from working on Wall Street across 3 years, is how to read individuals - So I think that's probably among my super powers, if you will. And if you have actually got a good BS detector, you ought to listen to it. Okay. You must absolutely listen to it. If I'm taking a seat and I'm talking with someone, and they have actually got all the bonifides, however you understand, there's simply; it's not agreeing with me, there's something about them that's not agreeing with me.
There are many other deals out there to look at. Yeah, there's too much opportunity. Yeah. And speaking of chance, you understand, you kind of discussed at the start, Bitcoin and Ethereum, many people have actually heard of these 2, especially Bitcoin, since it looks like it's in the news all the time, something or the other.
Have they missed the boat on Bitcoin? Bitcoin is trading nearly upwards of $6,000 just recently; it's shown up from state $3,000 not too long back, it's quite unstable. Do they sort of wait for a pullback, or do they simply say, "Okay, I'm going to purchase some Ethereum, I'm going to buy some Bitcoin, see you in 10 years." You know? Yeah that's a terrific question.
You can literally use small stakes, and transform them into life-altering quantities of money. So I believe the initial step is, get clear on, if I lost all this cash tomorrow, if I put it in Bitcoin, I desire to make sure that it's not going to have me asking my moms and dads for hamburger money, and sleeping on their couch.
And then on the first 50% pullback that you see in Bitcoin, purchase the 2nd half. Which way you're not going to get the perfect price, but you're going to get a good cost. And after that just leave it alone. And to your concern, is it too late to purchase Bitcoin? Never.
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 indicate, I'll take that all day. A little bit simpler in cryptocurrency than getting Apple stock. Right! And you talked about this volatility.
Suggesting that Bitcoin is about 10 times more volatile. And they think that as it becomes less and less volatile, it's going to be much easier to actually rely on as a currency. Correct. Now, we're in an age where news, whether you call it FUD, worry, uncertainty, doubt, really drives the rates of these cryptocurrencies up and down it appears like.
A lot more, to a level, than the stock exchange. Due to the fact that there are larger gains and larger drops. Do you feel that the marketcap has 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 assist reduce that volatility, which in turn will lead to more widely accepted usage of an actual currency? It's sort of like the chicken egg thing practically, however there's got to be some point where it shifts (undefined).
And it shows that you actually do understand the space asking that concern. So normally the life cycle of originalities is that it's the speculators and the early adopters that first enter into it, before it enters into mass adoption, and after that becomes what we would think about real innovation, right? Right.
It went from cents to a hundred and modification, and then back to like, five dollars, and now it's got over a half a trillion market cap. Yeah. So what you'll see is a similar circumstance with Bitcoin. Now we likewise saw Bitcoin go from cents to $1,200, back down to $200.
It's now in its phrase of entering into its mainstream phase. Now, in order for it to be a currency, you're right, the volatility needs to reduce considerably. And it can't decrease greatly till it gets actually above a trillion market cap. Okay. So the question 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.
Therefore, as institutional cash begins coming into the marketplace, which is what I anticipate 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 utilize legitimately to pay wages and buy things and truly utilize as a currency - It's more of a speculative car that is also a storehouse of worth. Mm-hmm (affirmative). And so when you take a look at, you kind of spoken about position sizing and going into in and trying to find, I think you pointed out a 50% pullback ( In cryptocurrency, I remember not too long back, Ethereum, I seem like it went from $300 to 10 cents or something in a day. That's right. However then, next thing you know, it was back towards $400, and after that it's pulled back. So the volatility varieties 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 determine is, are you more just put something in, if there's a pullback, put some more in. Yep. If it pulls back even further, look at your position sizes. If it makes good sense, possibly purchase once again. However do not get too captured up in the plus green balance in your account, or the minus red balance, you know? Due to the fact that- Yep, 100%.
Yep, 100. That is the way to go, because we could have one announcement tomorrow, and Bitcoin's $25,000, and then you would have missed it, right? Mm-hmm (affirmative). So get in, get your feet wet. Get begun with something that's not going to squash you if you're down 50 or 60% - undefined.
Do not go put $200,000 in, and you're down 60% tomorrow, and you're ready to jump off a building. Do not do that, that's just not smart. Be logical, get your feet damp with this technology. Know that you're not going to get a best print, right? Put your ego aside, toss it out the room, it's got no organization here.
You will see a 50% pullback in Bitcoin at some point. Now we might go to $15,000 first, before that next 50% pullback. But you will see one. So put your half position on, wait on the first 50% pullback, put your other position on, and strap in for the ride, 'cause it's going to be incredible.
Yeah. Which leads me to feeling. I trade choices myself, too, and for me, stock trading and specifically choice trading, fits my character profile. I'm extremely unemotional; I'm disciplined, I look for the best, and after that get in the much better. I'm really tactical about it. But the average individual as we know, is reactive, when it pertains to investing, they desire to purchase Amazon when it's now trading over $1,000, and they want to offer it when it's at $800, and purchase it back when it's at $1,200.
And I take a look at the very same obstacle with cryptocurrency, except I see it on a more severe level, because it has an even bigger FOMO mindset. Where people have this worry of missing out on out, they believe, I could have bought Bitcoin at pennies, and if I would have bought $100, I 'd have $70 million or whatever, you see these short articles all the time.
That was most likely not excellent." And I had done that numerous times in these much lower numbers. But back then these were revenues, right? These were real profits. 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 discover it.
And outside of position sizing, how do you advise the folks that you educate about cryptocurrencies to protect themselves from this FOMO, psychological spiral that can happen? Yeah, so again, a lot of the time, every other week I put out a video, and I yap about rationality, being logical.
On our journey to producing wealth, it's not the federal government or someone else or our moms and dads who are holding us back, right? It's all up in here. Due to the fact that 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 unsightly.
So we bring all of our own drama to a development of wealth. So a few of the important things that I do to help us safeguard ourselves from that is diversification, to be humble adequate to state, "Look, I might suggest an idea that could go to zero." And so we need to be diversified, and the other thing that we do is we utilize something called uniform position sizing.
So I'll provide you a prime example. I suggested a really, very little cryptocurrency earlier this year at 13 cents. And I stated, "Look, if you're a little player, probably put $200 to $400, perhaps $500 max in it. And if you're a bigger player, you can put $1000 into it." And so that particular coin went to as high as $50.
Yeah, yeah. Right? So, I'm not going to state that every single concept I take a look at does that. There are some concepts that haven't exercised. But when you have a portfolio of concepts, and you use consistent position sizing, a few things occur. One, you're going to get fortunate, ideal? You're going to have a number of trades that are simply remarkable.
Even if you have 10 concepts with $500 each in, $5,000, for the majority of people, they lose $5,000, if whatever went to absolutely no, yeah, it's gon na draw. It's not enjoyable. 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 pleading for burger cash.
Because of the appeal here Ryan, you understand I get passionate about this, you've got to forgive me, but the beauty here is we're so early. Mm-hmm (affirmative). We're so early, that we do not have to be that brilliant, right? We need to be intense adequate to have a core portfolio of excellent names, to have reasonable position sizing, and after that be brilliant enough to do nothing but wait.