Investing - not speculating in digital assets

Don’t expect to “get rich quick” when investing in bitcoin and other digital assets

 Ric Edelman: Welcome back to The Truth About Your Future. As I've been telling you for years about crypto. It is unlike any other asset class ever invented, has nothing in common with stocks or bonds, real estate, gold, oil, commodities, and therefore is a wonderful addition to a diversified portfolio because that's the whole point of diversification, to have lots of different assets, lots of different asset classes. And to illustrate the mainstreaming of this entire technological environment, the metaverse. Microsoft has now bought Activision for about $75 billion, one of the biggest companies in America buying one of the biggest players in digital gaming. Oh, and Binance, one of the world's largest crypto exchanges, has just taken a $200 million ownership position in Forbes magazine. So in the past, we've generally seen crypto companies getting bought by mainstream. Now we have the opposite. Crypto is buying mainstream. So here's the crazy thing about crypto. Do you own Bitcoin, by the way? You very well may. One out of four Americans, according to recent studies, own digital assets such as Bitcoin. But here's the crazy thing. More than half of all Americans who own Bitcoin have lost money doing so. Why is that? Because more than half who owned Bitcoin bought it last year when bitcoin was near its all-time high of $60,000. Well, bitcoin then fell in value as low as $39,000. And so not a surprise that if you bought bitcoin at or near its high, you probably have lost money. Is that freaking you out? I mean, you keep hearing about all the hype, all the excitement. You hear me with big enthusiasm about Bitcoin and Ethereum and the broader digital asset space.

Ric Edelman: And maybe you got convinced that, okay, this is something you ought to go buy and you went and did, and next thing you know, you've lost 10%, 20%, 30%, 40% of your investment. Check out this email that I received from one of our listeners. He says, "Hey, Ric, I bought Bitcoin last year and it's become an absolutely awful investment for me. I'm losing money. This is totally unfair. Where do I go from here? Do I just stick with it and hope this ridiculous loss eventually narrows? Or is it a total lost cause? And should I get out now of this absurd investment? I think you catch my drift." Yeah, I do catch your drift. Here's the point. You need to make sure you understand the investments that you're buying. You need to understand the investment thesis. You need to have a long-term perspective. Expecting to get rich quick - I'm going to buy it today and therefore it will go up tomorrow, that's not investing. That's speculating. So let's rewind a little bit and ask, why did you buy it? If the only reason you bought it is that it's at an all-time high and you think it's going to go all time higher, well, that's not a proper investment thesis. On the other hand, if you're impressed by the technology, if you believe this is going to have application for commerce on a global scale and increased adoption worldwide will result in an increased price over time, meaning years, not weeks, then you may well conclude that today's price is a bargain compared to what the future price may ultimately be.

 Ric Edelman: So ask yourself a simple question, were you trying to get rich quick looking for a quick return? If that's all you were seeking, sell now and never come back. On the other hand, if you're investing for the long-term potential of the technology, be patient and wait. Sit tight and focus your attention elsewhere. Instead of paying attention to the momentary price right now, recognize that you want to be Rip Van Winkle - buy it, set it, forget it, and turn around in a few years and let's re-evaluate then.