FUD is a short form for Fear, Uncertainty, Doubt.
FOMO is a short form for Fear Of Missing Out.
We keep hearing these terms on every platform nowadays. The reason being exactly the same terms, FUD and FOMO. When the market keeps rising, FOMO spreads like wildfire and when the market keeps falling, FUD fear takes over. Both are equally bad for an investor, a speculator and a trader.
Benjamin Graham (Warren Buffet’s Guru) writes in his book, The intelligent investor, about the emotional equilibrium that one should posses if he wants to succeed in stock market. He discusses some important concepts in his book, value investing, dollar cost averaging and margin of safety. Let us see how these concepts can be applied to the crypto market.
Margin of Safety: Most of us don’t have so much money that we could loose. It’s always important to have some kind of hedge against possible losses. Therefore, it’s important to invest at least 50% of our money into established cryptos like BTC(which is currently undervalued, down by 42% from its ATH), ETH, BCH and so on. It’s very tempting to invest into altcoins which give 10x, 100x in very short period of time. Many of them may be overvalued and investing 100% of your money may prove costly.
Dollar Cost Averaging: No one can predict markets, period. Not you, not me, not any billionaire nor any YouTube gurus (sure the latter halves could manipulate the markets, if you observe closely). It’s very important to do DCA if we’re in crypto or any market for the long term. Just by investing every week/month, we’ll surely be on the winning side. We shouldn’t put all our money thinking that, it is the dip, or shouldn’t sell every last coin thinking that, it is the ATH. If we have spare money, we could buy more when price decreases and sell more when price rises(only if we’re in need of money). Trading seems attractive, but it can bite us if we aren’t careful (Personally, I don’t recommend trading).
Value Investing: With the remaining 20-30% of our money, we could buy those coins, upon complete research and thorough understanding, which are cheap. Those coins may have bright days ahead, we have to believe in them and invest. For example: competitors of ETH - we should study their white papers, how there are different from ETH, team behind the development, how many years under development, possible adoption into the ecosystem, max supply. If we’re continuously asking these questions to ourselves, we’ll find those gems, which may(or may not) give you 10x, 100x gains.
If we’re in for the long game, then there’s no need for FOMO and FUD in our lives. No need to listen to market manipulators, no need to daily look at your portfolio, we should stop all these things. We should work hard to earn more, so we could invest more, regardless of the market conditions. In the end we’ll be okay.
Disclaimer: The article is intended for informational purposes only and should not be considered as investment advice. All the prices and data referenced in this article were recorded on May 31, 2021.
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