I have been receiving lots of valuable feedback on my last e-mails. A lot was around how to start investing or what lessons I would tell my Younger Investor Self. Obviously, everyone has their own investment issues, but here are some crucial 7 mistakes I would try to avoid – no pictures or gifs today… just plain straightforward text with value nuggets:
- First and foremost, the easiest and safest way to make money is to EARN it. Not to gamble for it by investing. I know people want to take the easy road, but they forget, that skill number 1 with money is to learn to Earn it (then to keep it, and only then to multiply it by investing). Today, most people in the crypto space remember me for making a fortune with well-timed buying and selling of crypto. However, they forget that I learned how to make money when I was a professional kitesurfer about 17 years, when I started doing kitesurfing camps, photoshoots, etc. In my best months, I made around 30,000 – 40,000 USD. This was at the age of 20 and at a time, when 30,000 USD was still a fortune, and not completely inflated away like today. If you want, I wrote a book after I had made my first million called “25 Stories I would tell my Younger Self” – a lot in that book is around the skill of making money by being super useful. I also share stories of a crazy ex-girlfriend that was looked for by the FBI, about sex, drugs and rock-n-roll in Brazil, etc. But, the key part here is really the part about skill nr. 1 with money: Earning it.
- Once you earn money, learn how to keep it. This does NOT mean to leave it in cash on your bank account – it will get eaten away by inflation over the years. It means, to ask yourself the question, where should you put your money so you “are NOT wrong”. This is different to what most people ask: “where do I get the most return?”. Atm. pretty much all of my money is in what’s called a Beta Portfolio – a portfolio that will probably NOT give me 100% per year, but I also won’t lose much. This is different to how I was positioned in 2020 and 2021 – Then, I played Pure Alpha… Full on trying to be right. A lot about investing has to do with the general landscape. During similar “environments”, similar investments will do well. So, if you expect a certain investment to do well, study history. This is a key concept Ray Dalio teaches.
- When buying and investment, people believe the purchasing price should dictate the selling price – that they should sell in plus or minus. This is obviously wrong – you should buy when price < value and sell when price > value. Also, the concept of hodling doesn’t exist in a liquid investment. You have to envision, that you are selling the investment every moment and you have to purchase it again. This way you don’t fall for the endowment effect. Annie Duke wrote a fantastic book on that called QUIT.
- People believe the past equals the future – that past investments will also do well in the future. This is obviously wrong. Many investments will not recover and referencing bitcoin’s return over the past years says nothing about its future returns. This also means, that in order to be a good investor, you will have to take unpopular decisions. This is why I believe good influencers will NEVER be good investors. Guess how much hate I got for selling bitcoin in 2021 at 62k. And guess how many of these people rather followed people back then who told them to go all-in. People prefer listening to people with their own bias and not to intellectually honesty, which mostly pisses them off.
- People mostly invest in price, not in value. Value is very hard to determine most of the time, so they just follow the crowd and invest blindly and hope for the best. If you have to look at a chart in order to make an investment, you are obviously price focused, not value. This is mostly a sign of unsuccessful investors. The best investors I know, calculate an investment’s value and compare that to its price. If you can’t calculate the value of something, you make want to be hesitant about allocating a lot of money there. Here is an example how I calculate Bitcoin’s value: https://julianhosp.com/the-value-formula/
- People believe someone with less/more money should invest differently. This is wrong. Good investments stay good investments, just as bad investments stay bad investments. The only difference may be liquidity limitations with some investments. For example, with 1,000 USD you can’t get access to certain investments and with 100mil USD certain investments cannot even be used because they have a cap.
- People don’t have enough timehorizon. I believe 2023 will be a great year for dollar cost averaging into crypto again. This is what I am doing almost every day now. Here are a few of my largest positions in my portfolio: Crypto: ETH & DFI; Stocks: NOBL & BRK; Cash. I love getting dividends, cashflow and interest on my investment. Heck, why do you think I am the CEO of a company that is all around cashflow?! 🙂
I hope you found this information helpful. As always, please do your own research and make decisions that are best for you and your personal circumstances.
To amazing decision-making and meaningful relationships!
Julian