Nick’s Note: There’s a lot of fear, uncertainty and doubt around bitcoin and cryptocurrencies right now. That’s why today we turn to the timely wisdom of PBRG guru Teeka Tiwari, who explains why riding out certain ideas is the key to future profits…
By Teeka Tiwari, editor, Palm Beach Confidential
As I look back over my career, the biggest losses I ever took were on ideas I got scared out of right before they exploded higher.
During the 1990–1991 tech bear market, I panicked and sold a large piece of my tech portfolio. At the time, it looked like a good decision.
I remember patting myself on the back thinking, “Look how smart you are selling some of your stocks. They are down another 30% from where you sold them. You are so clever.”
Had I held onto those stocks, I’d have been $20 million richer by the end of the decade.
I made the same mistake in 2002, selling Nextel at $2 per share during the bottom of the dot-com bubble. Less than a year later, Sprint bought Nextel for $14 per share. That was seven times more than the price at which I sold.
I did it again with Apple. I bought it in 2003 and took my profits far too quickly. Based on my position size at the time, my clients should have made $49 million on Apple.
Those regrets still haunt me.
It makes me think of people like Ronald Wayne, the third cofounder of Apple Computer. Just a few days after becoming an investor in April 1976, Wayne sold his 10% stake in Apple for $800. Today, it would be worth $90 billion.
In her biography of legendary investor Warren Buffett called The Snowball, author Alice Schroeder recounts the story of one of Buffett’s friends/managers who sold his Berkshire Hathaway stock.
During the 1973–75 bear market, Berkshire plunged 59%. The thought of further losses terrified the friend/manager, and he sold his stock at $38.
Just a few years later, Berkshire was at $1,385—a 35-bagger. If we assume he had 1,000 shares, Buffett’s friend would be sitting on about $300 million today.
The most tragic story about missed opportunities comes from a recent post I read on a Reddit discussion board. The poster was writing about his brother, who at one point in 2012 owned as many as 15,000 bitcoin.
If we assume he bought his position in 2011, the brother would have paid about 30 cents per coin… for a total investment of $4,500.
Sometime in 2013, the poster says his brother lost some of his coins due to a hack, and ended up selling the rest of his stake.
In April 2013, bitcoin peaked at about $250 per coin, then crashed to $74.
Assuming he sold his remaining coins at $250, the brother probably felt pretty good when bitcoin hit $74.
By the end of 2013, bitcoin traded at $1,100. Had he held on, he would have made $16.5 million in profits. When bitcoin crashed to $224 in 2014, I’m sure he once again felt some relief.
But in 2017—when bitcoin crested $10,000—the poster says his brother started to break down. He appeared fixated on the $150 million in lost profits that would have been his.
The surviving brother wrote, “He seemed constantly depressed over it and gradually became a shadow of his former happy self.”
Knowing he could have let $150 million slip through his fingers was too much for him to bear.
When his parents flew out to visit him, they found him dead. The poster says the cause was suicide. His brother was only 29.
(Let me be clear… No missed opportunity is worth taking drastic measures with your life. New opportunities will eventually present themselves. Enjoy your family. And focus on the things that matter in your life.)
At its peak, his 15,000 bitcoin were worth about $300 million. Even today—after bitcoin’s 66% drop—his position would have been worth $90 million.
There are coins we own in our Palm Beach Confidential portfolio that have this type of upside potential. The question is: Will you still own them when they make their giant leap?
The key lesson I’ve learned from these stories of missed opportunities—as well as my own—is so long as I have position sized properly, I would rather deal with the pain of volatility than the pain of regret over letting a life-changing investment escape my grasp.
With all the recent volatility in cryptos, I want you to print this story and keep it handy.
Let it remind you it’s better to deal with a few months’ worth of volatility than a lifetime of anguish.
P.S. If you or anyone you know is experiencing suicidal thoughts for any reason, know that you aren’t alone. The Suicide Prevention Hotline runs 24/7, every day of the year. Don’t hesitate to call 1-800-273-8255 to talk to someone.
For the first time, world-leading cryptocurrency expert and former Wall Street hedge fund manager Teeka Tiwari has an investment announcement so BIG that he’s partnered with one of the most recognized radio and TV personalities in America to help get the word out to as many people as possible.
Teeka has teamed up with Glenn Beck to create a one-off special extended broadcast, The Truth About Cryptocurrencies.