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Ryan: So you have actually taken a look at companies that are big companies, you have actually examined much larger marketcap type situations. Do you feel that that experience has helped you? Or are we in such, type of the infancy, that as you discussed, it is almost just typical sense. You simply have to type of look at it and believe reasonably about what's going on, and pull the feeling out? You have to pull the emotion out, and there are no traditional metrics that you can take a look at.
Okay. What I can utilize that I discovered from working on Wall Street across 3 decades, is how to check out individuals - So I believe that's most likely among my very powers, if you will. And if you have actually got an excellent BS detector, you should listen to it. Okay. You must absolutely listen to it. If I'm taking a seat and I'm talking with someone, and they've got all the bonifides, but you understand, there's just; it's not sitting well with me, there's something about them that's not sitting well with me.
There are so numerous other offers out there to take a look at. Yeah, there's excessive chance. Yeah. And speaking of opportunity, you understand, you type of discussed at the start, Bitcoin and Ethereum, the majority of people have actually heard of these two, especially Bitcoin, because it looks like it remains in the news all the time, something or the other.
Have they missed out on the boat on Bitcoin? Bitcoin is trading practically upwards of $6,000 just recently; it's come up from say $3,000 not too long ago, it's quite unpredictable. Do they sort of wait on a pullback, or do they simply state, "Okay, I'm going to purchase some Ethereum, I'm going to buy some Bitcoin, see you in 10 years." You know? Yeah that's a fantastic question.
You can actually use small stakes, and transform them into life-altering amounts of cash. So I think the primary step is, get clear on, if I lost all this cash tomorrow, if I put it in Bitcoin, I desire to ensure that it's not going to have me pleading my moms and dads for hamburger cash, and sleeping on their sofa.
And after that on the first 50% pullback that you see in Bitcoin, purchase the second half. Which method you're not going to get the ideal price, however you're going to get an excellent cost. And after that just leave it alone. And to your concern, is it too late to purchase Bitcoin? Definitely not.
Today it has about simply under a $100 billion market cap, so it's a 10x from here. Indicating that Bitcoin has to do with ten times more unstable. And they think that as it ends up being less and less volatile, it's going to be simpler to really rely on as a currency. Correct. Now, we're in an age where news, whether you call it FUD, fear, uncertainty, doubt, truly drives the prices of these cryptocurrencies up and down it appears like.
A lot more, to a degree, than the stock market. Since there are larger gains and bigger drops. Do you feel that the marketcap has to go up to assist control that volatility? So that there's, it's expanded broader? Do you feel that the news needs to turn favorable? What do you feel is going to help reduce that volatility, which in turn will result in more widely accepted usage of an actual currency? It's type of like the chicken egg thing practically, however there's got to be some point where it shifts ( And it shows that you truly do understand the space asking that concern. So generally the life cycle of originalities is that it's the speculators and the early adopters that initially enter into it, prior to it enters into mass adoption, and after that becomes what we would consider real innovation, right? Right.
It went from pennies to a hundred and modification, and then back to like, 5 bucks, and now it's got over a half a trillion market cap. Yeah. So what you'll see is a comparable situation with Bitcoin. Now we also saw Bitcoin go from pennies to $1,200, pull back to $200.
It's now in its phrase of going into its mainstream phase. Now, in order for it to be a currency, you're right, the volatility has to lessen considerably. And it can't reduce greatly up until it gets actually above a trillion market cap. Okay. So the concern is, what takes it to a trillion market cap if it can't be utilized as a currency? And it will be speculation that gets it there.
And so, as institutional money starts entering into the market, which is what I expect will occur in 2018, and I'll tell you why I think that in a moment, that speculation will be self-reinforcing, and it will take Bitcoin to the point where volatility will come way, method, way down, and all of an unexpected, it's now something you can utilize legally to pay salaries and buy things and truly utilize as a currency - It's more of a speculative car that is also a warehouse of worth. Mm-hmm (affirmative). And so when you look at, you type of spoken about position sizing and going into in and looking for, I believe you mentioned a 50% pullback ( In cryptocurrency, I keep in mind not too long ago, Ethereum, I seem like it went from $300 to 10 cents or something in a day. That's right. But then, next thing you know, it was back towards $400, and after that it's drawn back. So the volatility varieties are rather various. Do you sort of think that, 'cause what I'm attempting to get at here is, there are individuals who attempt and time the market.
And what I'm attempting to find out is, are you more just put something in, if there's a pullback, put some more in. Yep. If it pulls back even further, look at your position sizes. If it makes sense, maybe purchase once again. But don't get too captured up in the plus green balance in your account, or the minus red balance, you understand? Since- Yep, 100%.
Yep, 100. That is the way to go, because we could have one statement tomorrow, and Bitcoin's $25,000, and after that you would have missed it, right? Mm-hmm (affirmative). So get in, get your feet damp. Start with something that's not going to crush you if you're down 50 or 60% - Don't go put $200,000 in, and you're down 60% tomorrow, and you're all set to jump off a structure. Do not do that, that's just not wise. Be logical, get your feet wet with this innovation. Know that you're not going to get a perfect print, right? Put your ego aside, throw it out the room, it's got no business here.
You will see a 50% pullback in Bitcoin at some time. Now we may go to $15,000 first, before that next 50% pullback. However you will see one. So put your half position on, wait for the very first 50% pullback, put your other position on, and strap in for the trip, 'cause it's going to be incredible.
Yeah. Which leads me to emotion. I trade options myself, also, and for me, stock trading and particularly choice trading, fits my character profile. I'm very unemotional; I'm disciplined, I look for the finest, and then get in the better. I'm extremely strategic about it. However the typical person as we know, is reactive, when it concerns investing, they wish to buy Amazon when it's now trading over $1,000, and they desire to offer it when it's at $800, and buy it back when it's at $1,200.
And I take a look at the exact same obstacle with cryptocurrency, except I see it on a more severe level, due to the fact that it has an even larger FOMO mentality. Where individuals have this worry of missing out on out, they believe, I could have bought Bitcoin at pennies, and if I would have bought $100, I 'd have $70 million or whatever, you see these posts all the time.
That was probably not really good." And I had actually done that numerous times in these much lower numbers. But back then these were profits, right? These were real earnings. And who understood that it 'd be $5,000, $6,000, $20,000, whatever. So there is even some of this internal FOMO of like, what's the next one? Oh, I've got to find it.
And beyond position sizing, how do you encourage the folks that you inform about cryptocurrencies to secure themselves from this FOMO, emotional spiral that can take place? Yeah, so again, a great deal of the time, every other week I put out a video, and I yap about rationality, being logical.
On our journey to creating wealth, it's not the federal government or someone else or our moms and dads who are holding us back, right? It's all up in here. Since money doesn't care what color you are, it does not matter what school you went to; it does not care if you read well, or if you are good looking, or if you are ugly.
So we bring all of our own drama to a creation of wealth. So a few of the important things that I do to help us protect ourselves from that is diversification, to be humble sufficient to say, "Look, I might suggest an idea that could go to absolutely no." And so we require to be diversified, and the other thing that we do is we utilize something called uniform position sizing.
So I'll offer you a prime example. I advised a really, extremely little cryptocurrency previously this year at 13 cents. And I said, "Look, if you're a small player, probably put $200 to $400, possibly $500 max in it. And if you're a bigger player, you can put $1000 into it." Therefore that particular coin went to as high as $50.
Yeah, yeah. Right? So, I'm not going to say that each and every single concept I take a look at does that. There are some ideas that have not worked out. However when you have a portfolio of concepts, and you use uniform position sizing, a few things happen. One, you're going to get lucky, best? You're going to have a number of trades that are just fantastic.
Even if you have ten concepts with $500 each in, $5,000, for many people, they lose $5,000, if whatever went to absolutely no, yeah, it's gon na draw. It's not pleasant. But it's not going to put you in the poorhouse, right? You're not going to be sitting beyond Grand Central Station with your hat in your hand asking for hamburger money.
Because of the charm here Ryan, you understand I get passionate about this, you've got to forgive me, however the appeal here is we're so early. Mm-hmm (affirmative). We're so early, that we don't need to be that intense, best? We have to be brilliant enough to have a core portfolio of terrific names, to have rational position sizing, and after that be bright sufficient to do absolutely nothing but wait.