How many times have you scrolled through your news app, or your social feed and seen something about Bitcoin? Countless right? Bitcoin used to be inextricably linked with The Silk Road and the dark web, but it’s shaken that image of the underground and is now standing proudly in the sun. But with Bitcoin’s parabolic rise, a discussion on the art of the exit is in order - sometimes a material weakness in the majority of investors arsenal.
Almost all investment time is spent on not losing money – it’s a key tenant of investing right? Make money! And this (sort of) makes sense at a high level. Almost no time however, is spent on the art of entering and exiting ideas.
The psychology of this is fascinating:
You invest in a company, it goes up, you wish you had invested more and do nothing.
It goes up further, you kick yourself for not adding before, and still do nothing.
It pulls back a little, you cheer and add.
It falls further, you feel nervous and sell half.
It then doubles.
You sit fuming and do… nothing.
Take the Bitcoin investor who missed the first move, bought in at $7,000, sold at $10,000 and then watched in horror as it went to $30,000. That’s gotta sting. Or of course those who bought Bitcoin for the novelty and are now paralysed with fear as to what to do: stick or exit?
After years working in the finance industry, and running a $4bn Hedge Fund, the team at Upside have learned a lot, including that when it comes to timing, there’s no one-size-fits all rule, and that it requires discipline and planning.
When thinking about putting on a position, in anything, try to weigh the timeframe: weigh the amount of effort you are willing to expend on looking at it, weigh the return you expect and would be happy with, and finally what you are prepared to lose. These are your first level parameters.
Then stick to them, don’t follow the crowd, don’t be led: make and follow your OWN rules! #liveyourownlife
At Upside, we can help you on this path. Within the ecosystem you’re anonymous, whether you’re creating ideas, portfolios of ideas or buying them. This means the ecosystem avoids the usual pitfalls and biases that cloud judgement. Anonymity allows buyers to see the facts clearly, and for sellers to grow and develop their skills outside of the traditional hedge fund environment. It introduces a new kind of competition.
In life there will always be others who make more (and less) money. Don’t get lost in the noise. And finally: move on. Time is the most valuable commodity we all have, so focus on using it wisely!
There is an Upside to discipline, there is a science to being right.