Weekly Nugget of Wisdom #1

Always Discount Your Portfolio “All Time High” Number

Another new change to this Newsletter! In addition to premium posts every Monday, I’ll also be sending out a free post every Thursday. My logic here is that this Newsletter should now be a clear net gain for literally everybody over what it was when I was only publishing 3x a year lol. Plus, I like to write, and have a lot to write about, so why not.

These are going to be shorter and quicker reads, with the idea of them being little nuggets of (what is hopefully helpful) wisdom.

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Discount Your Portfolio “All Time High” Number

During a crypto bull market, virtually everyone is consistently refreshing their phone and checking the latest prices of their coins and portfolio. It’s fun and exciting to see number go up, not to mention extremely addictive. So you do it over and over and over again. Yay green. We like green, it’s much better than red. Red = bad.

Then any time number drops and you see your portfolio at a total amount less than it previously was, you feel a bit bad (red = bad). The more it drops, the worse you feel.

Inherently this isn’t a disastrous thing. It’s normal to feel good when you’re making money and bad when you’re losing money. The disaster strikes when you make poor decisions as a result of this (ie fall into the trap of "I will hold just until I get my money back, then I will sell”), or when it consumes you to the point of negatively impacting your life.

I like to combat these potential future problems by always and immediately discounting my portfolio value any time I look at it by 50%. If I see my overall portfolio is sitting at $500k, I think and expect to actually realize $250k of that.

This helps on a few levels:

1. You will never ever ever properly time the top and sell the top on all your coins. The very best traders are lucky if they sell within even 20% of the top.
   

2. Whenever you sell, there are inevitably going to be fees. Transaction fees, slippage, taxes, etc. This is especially true for collections with low liquidity (meme coins, nft collections). You will usually always take a big hit if you’re selling a large position in such things.
   

3. It makes it easier to click the sell button when your coins drop by 20 or 30%, because you are now no longer selling for a 20 or 30% loss, but you’re selling for a big gain over your mental model of a 50% loss! Great success!

It’s not always easy to do this and your brain of course knows you’re sort of playing a trick on it, but it is still astounding how well this actually works.

Hopefully you found this little nugget of wisdom helpful, please let me know in the comments if you did :-)

Also if you’re reading this shortly after it’s going out, there are still five days left on my premium subscription launch special offer. Actually it just so happens to be a 50% discount too lol - very on theme for this post!