Standing The Middle Ground
Easier Said Than Done
In today’s environment, nearly everyone is judged based on his or her label.
Labels are created to identify everything, including (but not limited to): religion, race, gender, age, ethnicity, wealth, intelligence, culture, creed, and political affiliation.
In the world of investing, the most common question thrown around is always: “Are you bullish or bearish?”
This suggests that you must choose a side. There are only two options. A label must be given.
But why do we have to be one or the other? What if it’s best to be both simultaneously and weight each of them in a dynamic fashion?
I bring this up to reflect on the fact that I am currently both a bull and a bear on cryptocurrencies. I am a participant in both thought groups, and I think this is a valuable exercise that more people ought to participate in.
While I can appreciate new entrants to the market being a bit overzealous and taking on larger positions in more cryptos than they probably ought to, it is healthy to follow this initial honeymoon phase and liberating moment of realization with a serious reflection on why we ought to be bearish on crypto.
It’s always good to see both sides of any coin, especially when your own money is on the line.
Maintaining a healthy skepticism to critically analyze the situation no matter how optimistic the evidence and narrative may be is something I always strive towards. While I am a believer in the “crypto revolution”, I must also ask myself questions along the lines of:
- Why will crypto fail?
- What sort of events/developments could really hinder crypto’s acceleration and prosperity?
- What are some of the things I dislike most about crypto?
- How will the government and powers that be respond to these cryptos?
- What will be my response should every major government and corporation declare crypto illegal or unfit for use, overnight?
Some of you may be thinking these are some overly critical questions to be asking at this time. I can appreciate your optimism, but let me just point out that I think all of these questions are reasonable ones to ask, and also ways that we can strengthen the space.
By identifying the issues in the space (and more importantly, raising awareness of them to the proper parties) we can resolve issues and help the developers working behind the scenes to develop and innovate these new assets.
And on top of that, we can put to rest any anxiety we feel when our portfolios suffer deep drawdowns. If you are able to answer the hardest questions you have about the space, and still decide that you are going to go long, then you will be able to commit to the space for the long haul.
There is no question about it, the long term prospects for this market are incredibly bullish. Out of all assets currently in existence, arguably the most bullish of all lie in the crypto markets.
That said, by putting some of your worst fears to rest in asking yourself the hard questions and preparing for the worst case scenario, you can then focus your efforts on working towards the best case scenario and having the proper time preference to allow it to manifest.
In my writing, I always strive to take a middle ground and explain my thoughts as clearly as possible. Inevitably, I will swing from bull to bear on any given day depending on my thoughts at the time. I sometimes go for days at a time where I am so deeply entrenched in the disruptive applications for specific crypto assets that the only thing I can think about is a tsunami bull market.
Meanwhile, on other days I may be having thoughts about how regulation, governments, banks, KYC/AML compliance, and most importantly, LACK OF PUBLIC AWARENESS will cause a headwind for crypto and setup a bear market.
These thoughts may develop after I read about regulatory news, security hacks, and more recently, in digging deeper into how extensive the dirty laundry list of our corporate sector and government (one in the same, really) truly is.
The important takeaway from this is to realize that you can be both bullish and bearish. In fact, I argue that this is the most effective way to approach investing.
It allows you to shore up your defense for a bear market and prepare for worst case scenario, develop a watch list of prospects that you believe will flourish most in a bull market, and it frees up mental capacity and energy to pursue the thoughts and ideas that will go towards making this community stronger.
“Tell me and I forget, teach me and I may remember, involve me and I learn.” — Benjamin Franklin
DISCLAIMER : This content is for informational, educational and research purposes only. This post is not to be taken as personalized investment advice.