Investing Psychology; Long Term Value-Investing
Our perspective on investing into DeFi and Crypto
Key Points:
Long term- The investor looks for profit long term. The price of coins will go up and down.
Value over cost- It's important to see the true value of investments regardless of how low cost some may be.
Emotional strength- Just like everything, success starts with you and your mentality. Without the proper mindset it’s possible to sabotage yourself.
Long term investing:
Time in the market beats timing the market.
Unlike the trader, the investor looks to "buy and hold" for the long term. Think of investing as planting a tree that gives fruit or an acorn. It takes time to grow a tree, like it takes time for an investment to grow. If you stop caring for the tree then it can die. In a similar sense, your investment philosophy determines how your investment can grow. This is why it is important to have a target for when to sell.
Investing for the long term is the same as other things in life such as diet and fitness training. It’s not what you gain in the short term, but what you get in the long term. Consistency over a long period of time pays off.
What makes the "buy and hold" strategy great is that it doesn't need the technical analysis traders use when making short term trades. Much of this type of trading is speculation and if you were to see the real numbers of those claiming to get rich, it would probably look more like a loss or breaking even.
You can never time the market.
Short term trading can be very stressful and even with technical analysis people are often wrong. This type of trading has some large wins and many losses.
Value over price:
“Price is what you pay. Value is what you get.” - Warren Buffet
When the market is down, people panic and sell. If you believe in what you bought, don’t look at the daily or weekly price. Track it over six months to a year.
It’s possible that a single tweet or news can affect the market, especially with crypto. Focus on the long term.
Overtime the price of crypto fluctuates by 40-60%. Often big bull runs are proceeded by huge dumps. When your investment is down remember why you invested in the first place.
Make investments into opportunities with a real use case. Be careful of investing in something that many people are buying just because of hype.
If a project is good it doesn't need constant updates. The fundamentals are what makes an investment worth your time.
Emotional strength
“You have power over your mind – not outside events. Realize this, and you will find strength.” - Marcus Aurelius
The management of emotions is something most people overlook. At the end of the day you are in charge of your investment because you are the one who invests. Be careful of having a victim mindset and take responsibility for your investments. Blaming developers for lack of price action and updates is out of your control. Focus on what you can control. Yourself.
*Having emotional strength cant be emphasized enough. It really is at the core of the actions we take.*
For most people, buying crypto is easy but not selling when when your investment is underperforming is the difficult part. The internet is filled with people who want quick and easy money. These people are dabblers and have a short term mindset. This is the exact mindset of the people who buy the abs in 5 minutes products. Society sells such products as it knows people like the quick and easy. It also tends to focus on negative news as that's what gets people's interest by pushing the right buttons.
Remember. Your interpretations of reality are more important than how things look. Most people let negative media dictate how they should think. You have the ability to think and decide for yourself. Not everyone gets angry or irritated when it rains.
Other things you can control is when and how much you invest. Learn to DCA (Dollar Cost Average) and have an exit strategy.
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