Last week the Google search traffic for “buy bitcoin” was at its lowest level since December of last year. My anecdotal experience is also that way fewer people are talking about it today than they were a couple months ago. And bitcoin’s price has dropped to about half of it’s all time high.
This is a visual representation of “chasing the hype”. Despite the price of bitcoin being WAY UP from where it was a few years ago, many investors have actually LOST money on bitcoin. How is that possible?! All of the money flows in with the hype when the price is near all time highs, the hype dies down, the price drops and all that new money is left with losses, while a select (usually lucky) few got out at the right time.
Bitcoin isn’t the only market that suffers from this. We recently saw it with the ARK ETFs… by the time the hype had built to a feverish pitch and money started flowing in, the price was at an all time high. Now it’s dropped almost 30% from those highs and most investors have lost money on the investment (despite the fantastic performance that preceded that few took advantage of).
But just because buying when the hype is high is bad doesn’t necessarily mean buying when the hype is low is good. There are lots of speculative investments around which there is no hype and those investments live up to the lack of hype and never go up in value.
So if you can’t trust buying when the hype is high and you can’t trust buying when the hype is low, what do you do? Ignore the hype! Buy and hold investments that are productive (pay you income just for holding them) and appreciate (go up in value over time). The two things I invest in are index funds and investment real estate. I plan to hold them for decades and let the market fluctuate along the way, knowing they’ll make me wealthy by being an owner.
As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.
-Jeremy
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