Post
Topic
Board Bitcoin Discussion
Re: Bitcoin Losers
by
kgo
on 11/06/2014, 15:33:04 UTC
You lost enough to buy an Xbox One and a few games.  Hardly life changing.  And if you had picked a safer investment, say the S&P 500, you'd have a 3-4% return by now.  Another $50-60 bucks.  Hardly life changing either.  Total amount isn't enough to hold you over long if you lose your job or have a medical emergency in either case.

First you need to decide how risk-adverse you are.  Bitcoin is the most highly volatile investment in the universe.  If you can't handle the swings you should invest in something safer with lower potential returns.

Second you need to decide how much you think bitcoin is fundamentally worth.  Not by looking at the charts, but by analyzing the value.  Saying "well it went up 10,000% in a year!" is a speculative attitude.  Saying (for example) "well if it takes 5% of the market of gold, which I think it can, it's worth X" and "if it takes 10% of paypal's business it's worth Y" is trying to put a price on the value.

Third you need to define your time horizon.  Do you plan to cash out in a year to put a down payment on a house? Then you don't want to invest in something so volatile.  Are you thinking well maybe it will pay for the kid's college in 10 years, but I'm still not going to hold my breath and save? Then maybe you want to buy some bitcoin.

After determining all that, it's a simple matter to determine if you think the current price is cheap, you're willing to take the risk, and you should buy more and are willing wait it out.