Schizophrenic Partner

“Every day he tells you what he thinks your interest worth and futhermore offers either to buy you out or to sell you an additional intreset on that basis. Sometimes his idea of value appears plausible and justified by business developmens and prospects as you know them. Often, on the other hand, Mr.Market lets his enthusiasm or his fears run away with him, and the value he proposes seems to you a little short of silly”

“The intelligent Investor”
by Benjamin Graham and David Dodd

Ladies and Gentelman, let me intruduce to you Mr.Market.
Your partner in investing that suffers from Schizophernia

The reason I’m writing these words. It’s because of my willingless to illuminate and shed some light about the cryptocurrencies. They are skyrocking to all time highs in the first half of the year due to nothing but high hopes for the future. And let’s wish those hopes are not a fairy dust, because people are going to lose their money if they are.

Making money on Wall Street is all about timing. By examining the numbers you can spot a good business, and if you have the right tools you could also know if the shares are selling at a good price.

But let’s be rational, no one can time the market, not even Warren Buffett.

You can only know what is going to happen in the long run for a good business. And in the long run if you bought the stock in the right price it’s going to go up. As Warren Buffett says: “If a business does well, the stock eventually follow”

If you take a look at the cryptocurrencies for example, (Bitcoin or Ether), their prices are reaching their all times highs and they are also getting crushed in a mid-day trade perhaps everyday. I usually don’t jump into those trades because you can’t realy know what’s going to happen, I can’t point to the next five or ten years and say : “Okay we are going to have this Cryptocurrency used by all of the goverments or by the banks. (In this case, it will reach new highs and grow in its value, people who bought that Cryptocurrency would be LUCKY), or it might be the other way around and get banned. Then this Cryptocurrency will get crushed and have no value. In my point of view it’s only a speculation and I will write about that in my next article to explain what are the differences between speculation and investment.

Don’t be greedy, and don’t get cought in the Euphoria that everything is going to go up, it’s your money and you worked hard for it. If you have some extra money and you see or know something that I don’t, it’s okay to speculate according to it but only with your extra money. But don’t get it out of proportion, especially not because someone is having higher returns than you are. Stick to your own investing dogma and don’t get caught in the trends that your Schizophrenic Partner Mr. Market is offering you.

Disclaimer:

Don’t treat any opinion expressed by me as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of my opinion.

Advertisements