When gold prices (in dollars) soared from 70s stagflation, then crashed, was it smart to sell the top? OK, how do you know what the top is?
In gold’s extreme, extended bear market, after it started crashing, was it smart to sell at $800? $700? $600? Selling for $600 and later re-buying for $300, you could have doubled your gold holding.
...$500? $300? $260? Whoops! Selling for ~$260 (IIRC*) would have been mindrusting gold.
Holding gold is always safe, if your biggest concern is not to be stuck with less gold than you have already accumulated.
Holding BTC is always safe, if your biggest concern is not to be stuck with less BTC than you have right now.
* Numbers here are tossed off the top of my head to make a point. If someone corrects any errors as Jay corrected my recollection of when Slaying the Bearwhale occurred, then... eh. Here, at least, it will not change my point.
So you are saying investors should only accumulate gold or BTC to increase their portfolio? If you do not extract some profits from your gains and reinvest them in that same assets or something else then
you are not an investor. You are more like a collector. Professional investors always circulate their money in the different asset classes. If you do not know what the bottom or upper limits are then follow the market sentiments.
If you think of yourself as an investor you must keep track of the market about what's going on. Many people think a bear market is a downside of our economy but wise investors knows this is their opportunity. You can get things with a high discount price in a bear market so buy when everyone is selling and start selling when everyone is buying. This is that simple if you do not know about price actions charts or fundamental analysis.
Semantic game, No True Scotsman, and an absurdity: What you mean is that I am not a
trader. You are repudiating the whole concept of “buy and hold”. (Also, you implicitly figure PnL in dollars—not in real money, i.e. BTC. For my part, I sometimes spend BTC on investments to make more BTC. Figuring PnL in a depreciating, perpetually devaluing currency is extremely stupid.)
You say “collector” as if there were something wrong with that. It is funny, because I have called myself a “collector” in my own thoughts about investment strategies. My explicit goal is to collect and to accumulate valuable things, and to keep them.
In stocks, would you call Warren Buffet “not an investor”? Buffet is a damnfool about Bitcoin; he should stick to what he knows, and he does know stocks! He is the most famous (and only most famous) investor who takes the
extreme buy-and-hold approach to stocks.
I call the extreme buy-and-hold approach to investing:
If you buy something good, the best time to sell is never. Selling is an admission that you made a bad call when you bought—either you bought too much of something that’s not good enough (so, reduce your exposure to it), or you bought something bad (get out! run away!). It happens. Nobody makes the right call on 100% of investment decisions.
Of course, it is not the only good approach. But in my opinion, it is the only good approach that >99% of people can achieve.
For an examine of polar extremes (not to exclude the middle), see also:
The buy-and-hold strategy does not give a free lunch: HODLers pay every day for their future wealth, in the time value of money. HODL incurs opportunity costs. HODL also embraces long-term fundamental risks; long-term risks are the cost of easily avoiding short-term risks on the irrationality of the markets.
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This also relates to my thoughts on money at rest versus money in motion.
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One way trades the time value of money for the safety of money at rest, and avoids short-term risks by depending on long-term fundamentals. It requires the ability to buy BTC, and to avoid panic-selling.
The other way relies on keeping money in motion. The requirements list is much higher. The risks of failing to meet those requirements are extreme.
Take your pick!
For the record, for anyone interested in the postmortem of how I wrecked my own finances: A major motive for me my fatal experiments with debt—a position that I explicitly called “shorting the dollar” at the time—was my desire to never sell anything, ever, except dollars which I love to sell. Top priority: Never spend BTC. Lower priority: Accumulate a basket of alts, without the ongoing necessity of trading back to BTC to take profits. Collect more of everything—more, more, more of everything!—and use it all as the basis for (strategy not for public discussion) to generate dollar income paying down dollar debt as it depreciates.
“Buy appreciating assets with depreciating debt” is an excellent theory, which proved catastrophic in practice. It would work, if I had (a) orders of magnitude higher capitalization to begin with, and (b) access to lending terms that are not insane for long-term debt. Otherwise stated: It would work, if I were Michael Saylor! I am not Michael Saylor. By crudely pretending that I was Saylor buying BTC with debt, I ruined myself financially. Playing a children’s game of make-believe-I’m-Saylor with a cryptocurrency margin account is what got me dollhouse-sized finances. Newbies, take heed: You are also not Michael Saylor.