In my latest article I wrote about the rug pull that happened in the MonkeyCash token on SmartBCH. And as always I wrote that none of the information or opinions in my article should be interpreted as financial advice.
One reader left a comment saying that even though I wrote that the article is “not financial advice”, it still sounds like I implied that the token might be a good buy because the price is low and based on nothing else.
In this article I would like to explain why all my articles are not financial advice - and why they couldn't be financial advice even if I wanted them to be - which I definitely don't.
Spoiler alert: It's not just that I don't want to be sued. There are other reasons as well.
I will also respond to the comment and respond to the allegation that I implied that the rug pulled token was a good buy.
First of all:
I hope we can all agree that it is always possible: No matter how useless something is, you can potentially make money on it - if you find someone who is willing to pay you more for it than what you paid. The question is: How likely is this to happen?
With that out of the way:
I think that a whole lot of what I wrote in the previous article has to be disregarded to come to the conclusion that I implied buying the rug-pulled MonkeyCash token was a good idea. Let's have a look at what I wrote:
The price of the token is definitely very low right now. So it may even be a good buying opportunity. However, this is definitely not financial advice - and I haven't bought that token and don't plan to buy it either.
I clearly wrote here that "I haven't bought that token and don't plan to buy it either." Does that sound like I imply buying the token is a good idea? By the way, I still haven't bought it and I'm still not planning to.
What will you do? Will you buy the token and gamble hoping for a price recovery? Or do you think the token is dead?
I call buying the token a gamble.
Remember what I wrote about the possibilities? It is a gamble, because it is theoretically always possible to make money on something you bought - especially if the buying price was low, but I express that I believe the probability for that to happen is low by calling it a gamble.
Personally, I concentrate on buying projects where I either know the creators - and where the creators have a good reputation in the Bitcoin Cash community - like KTH and ARG - or where the token is a public good like MAZE.
CATS and KITTEN are probably fine, too. The developers are anonymous, but have shown in the past that they are reliable and they seem to act in the best interest of the token holders.
Here I give my reasons for not buying the MonkeyCash token after the rug pull - and state what I did buy instead.
So yes, I wrote that the price of the token was very low compared to the prices before the rug pull - and the low price might in fact present a buying opportunity, but I also state that it is a gamble and that I didn't buy it myself.
If an asset's price drops hard, it can sometimes bounce back before falling deeper. That is called a "dead cat bounce" and happens usually when an asset can be shorted. On a bad news event shorts may be opened which have to be covered after making some gains leading to temporarily higher prices.
The other possible reason for a dead cat bounce is that bargain hunters could buy the asset hoping for quick returns.
And of course, a price turnaround is theoretically possible, too, but as I said that's unlikely.
In hindsight, I should have explained in more detail why I wrote the above - and I should have made it clearer that even though there is the possibility for price increases, I don't think it's very likely to happen - and that's why I called it a gamble and why I didn't buy the token.
So thank you for the comment. I will try to make this more clear in upcoming articles.
With that out of the way:
For me to give you financial advice, I would need to have the proper education - which I don't - and I would need to know your personal risk tolerance, investment time horizon and I would need to know your entire portfolio. Obviously, I don't know any of this information. And this information is probably very different for each of my readers. So writing one article that suits everyone is not even possible - even if I knew everything about every of my readers. I would have to write a different article for each reader. Some of these articles may be similar, but probably not exactly the same. Others may look very different.
A 16 year old person who has their entire life of earning a salary in front of them, probably has a lot less to invest, but may be able to afford taking much higher risks than a 65 year old recently retired person. That person probably has a lot more money to invest, but should take low risks for most of their money - unless they want to risk having to start working again.
So no, my recent article wasn't financial advice. And it couldn't even have been financial advice - even if I had wanted it to be.
And let me state that very clearly: I also didn't want it to be financial advice.
That's why I wrote in that article that it wasn't financial advice.
In fact, you will never read any article that I write which is financial advice.
Thank you for reading! And see you in the next "not financial advice" article.