Happy Friday everyone!
Let’s talk about the elephant in the room quickly - the crash in crypto prices this week.
First - a quick reminder. The key to incredible investment returns is simple:
buy high-quality assets that compound in value
Now that seems easy on paper, but we have this goddamn 2 million-year-old thing between our ears that just seems to get in our way every time.
I’ve written time and time again that the most important skill of an investor is to do nothing.
Warren Buffett famously attributes his success not to his IQ - but to his temperament.
And Fidelity, an investment brokerage, found that their best investment clients… were the dead ones.
There’s a reason for this:
“the first rule of compounding is to never interrupt it unnecessarily” (Charlie Munger - in case you were wondering).
And that’s where most of us go wrong.
If markets went up in a straight line, we’d all be rich.
But the path to great returns is paved with turbulence.
Imagine getting on a flight from London to Bora Bora. It’s a long flight, and you know there’ll be turbulence on the way. But it’s BORA-BORA! Freedom.
Even with some turbulence along the way, the flight would be worth it, wouldn’t it?
You wouldn’t think of jumping out of the plane halfway through the airs at the first signs of turbulence.
Yet most of us never reach the financial Bora Bora exactly for that reason.
We jump out of the window whenever we get a little scared - even though we know in advance there will be turbulence along the way.
That’s why, on average, individual investors lose money in markets - because they panic sell when their investments temporarily go down in value.
Of course, if you’re reading this, you’re not average.
But we are all subject to the whims of our own psychology.
Humans are wired to be fearful.
We conquered and dominated every other species on planet Earth by being the most paranoid, fearful, and aggressive species of all of them.
Your brain isn’t designed to cope with the endless stream of information coming at you every day - including the constant up and downs of the market.
We’re extremely loss averse, and so we panic.
So what now?
Your job as an investor is to stay cool like a cucumber to avoid jumping out of the plane on your way to Bora Bora.
Now - let’s be honest, if you bought some random crypto you heard about from your cousin because you were gonna sell it next week for more, it was probably a dumb move in the first place.
Instead, just buy high-quality assets - like bitcoin and Ethereum - and hold them for the long term.
Because if you zoom out of the current chaos and look at the bigger picture, you’ll see that this “crash” is just another blip in the overall long-term adoption cycle of crypto.
For example, this is the current bitcoin market cycle compared to the one 8 years ago…
And here’s compared to the more recent one 3 years ago…
We’ll get to Bora Bora. All you’ve got to do is hold on - and not jump out of the plane.
I’m comfortable owning bitcoin and Ethereum for the next decade. This week’s chaos changes absolutely nothing about that.
So sit back, relax, and watch a movie.
Shut off your computer, delete the social media and crypto price tracking apps on your phone, spend some time with your family, exercise, get some sun - and go for a walk.
In France, restaurants just opened up again, so that’s where you’ll find me.
All will be well in crypto land eventually, and checking prices every 5 minutes isn’t about to change that.
Speaking of walking,
There is mounting evidence that walking is a human superpower that makes you healthier, happier, and brainier than pretty much anything else out there.
There’s gotta be something to it. Einstein, Darwin, Churchill, Beethoven, Socrates, Artistotle, Kant, Nietzsche, Twain - all walked religiously to clear their minds.
So naturally, for the last 6 months, I’ve been walking at least an hour every day waiting for my inner genius to kick in (I’m still waiting - by the way).
In the meantime, walking helps build your internal GPS system (in case your phone dies) and makes you more agreeable, open, extraverted - and less depressed. Not bad.
Of course, if you prefer to sit at home…
…this book will show you how to drink like a billionaire - on the cheap.
I quite enjoyed it…with a glass of Picpoul de Pinet (page 65).
Remember, the good life isn’t expensive or difficult - it just takes design.
It takes designing your life so that inputs (like the news) don’t sabotage your psychology or your results…
And it takes designing your life to live it anywhere you want, doing anything you like.
Yes, you can have your cake and eat it too.
Read it while sipping Tawny Port wine…because what else?