The most successful investors are dead. Why? Tune in for encouragement regarding your crypto investments and some lessons from Tesla stock about the value of patience.
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Don’t Let Boredom Rob You Of Life-Changing Gains
In this episode, I’m going to talk to you about boredom. I’m going to do things a little bit differently here. We’ve seen Bitcoin trading sideways and it’s very easy to get bored with something when it’s trading sideways, meaning it’s not moving up or down very much. This is especially after a big drop. It dropped 50% and then it’s been trading pretty sideways. What I want to do is give you some perspective on what it takes to make an enormous amount of money from an idea.
Part of that is a little bit different than what you might traditionally think that I would say. The path to profit is not a straight line. If anybody ever tells you that it’s a straight lineup, they’re not going to tell you that because they know better than that. There’s a price to pay to make an enormous amount of money from a single idea. A lot of it involves dealing with volatility, being able to stomach an asset class that goes up super fast and then comes down as super fast as it went up. Gut-wrenching.
Another part that’s not often discussed is dealing with boredom. What I’m going to do is take you through an example of a stock that had a phenomenal move from 2012 to 2022 Tesla appreciated by about 200X. That’s crazy. It’s remarkable for a stock to move that much in a decade, going from $6 to as high as $1,200. It was in the mid $40 per share. It promptly collapsed right after before going up 30 times over the following 2 years. It had a staggering run. However, I’m sure many people saw it immediately tank and probably sold it off right away or they got bored during this period so they sold it and then missed this epic run.
This is probably why it comes down to. I don’t know if this study is legit or real. I’ve seen it multiple times but I don’t 100% trust everything I read on the internet. I hope you don’t either. The study accounts, “The people that had the most success in investing were people that were dead because they didn’t do anything with their accounts.”
That’s the thing. When you don’t touch your accounts, you just let it roll regardless of whether it’s trading sideways, you’re bored or it’s going up and down fast. None of those things matter. Your emotions are out of the way. You’re left to buy great assets and hold them for long periods, which is the key to building wealth.
I want to use Tesla as an example as it’s very similar to Bitcoin. When Tesla first came out, it was greeted with an enormous amount of skepticism. Even after years of success, there was a huge skepticism about Tesla until one day, everybody woke up and realized, “These guys are going to dominate the electric vehicle business but more importantly, the software for the EV business.” They get this explosive move up. This is what we’ll see during the next big rally in Bitcoin. I wish I could give you the exact date when it’s going to happen but I have no idea. Nobody does.
Another thing that I want to deal with in this episode is that it’s more important to get the big move right than it is to figure out exactly when the big move is going to happen. Figure out the exact day that the big move is going to happen. It either happens through luck or insight information. Those are your two options. One is illegal and one you can’t rely on.
Now that I’ve learned a lot about investing, I shouldn’t say I always thought this way because I did not. I’d be probably triple to quadruple as wealthy as I am. I’m thinking more of a sophisticated investor. I’ve got a lot to go and learn to ultimately be in that class. At 3 to 5-year timeframes when I’m getting involved in high-growth investments like Bitcoin or Ethereum, I’ll pull back the camera and say, “Forget what’s going to happen over the next 2 months or even the next 2 years. Over the next 3 years and more likely 5 years, is this asset going to go significantly higher?”
I look at the rate of adoption. I say, “Will the rate of adoption of Bitcoin and things like Ethereum be significantly higher 3 to 5 years from now?” If the answer is yes, then you buy it. As adoption ramps up, you’ll see this explosive movement price but along the way, it’s going to be quite a bumpy ride. That’s what I want to take you through.
In building your assets and net worth, we want to let time do the heavy lifting. Imagine in 2012 you bought Tesla for $6 and somebody told you, “Sometime within the next 10 years, you’re going to 200X your money and it’ll be worth $1,200. I can’t tell you the exact date when that’s going to happen. Also, what I can tell you is that during this process that you own this stock, you’re going to lose 50% of your investment on paper multiple times.”
“I can’t tell you how many times it’s going to happen but it’s going to happen multiple times. You’re going to go through periods where you’re going to hold it for three years and the stock’s going to do nothing. It’s going to look like it’s asleep at the wheel. If you hold it over that 10-year period, you’re going to 200X extra money.”
Nobody can do that because nobody’s blessed with knowing what the future’s going to be. This is the mental game I’m playing with myself to not get too caught up in the day-to-day movements of Bitcoin or Ethereum. I say, “I don’t know on a day-to-day basis where this is going to go and trade but five years from now, it’s going to be significantly more valuable because significantly more people will be using it.” That has been true and will continue to be true.
We’ve gone from 3 million Bitcoin users back in 2016 to 150 million plus users in 2022. Over that period, we’ve seen as much as 160 times increase in the price of Bitcoin. That’s all ancient history. There’s no going back. Pretty much all of us missed that. You probably would not be reading this show if you would’ve caught that wave. You’d already be mega-wealthy and be like, “I don’t care anymore.”
It’s the future that we’re concerned about. I’m here to tell you that we are going to see 500,000 Bitcoin sometime in the next few years. It’s all going to be based on adoption but let’s talk about what the next few years may or may not look like and probably the may side. If we look back at a chartered Tesla from 2011 to 2013, there were three years of sideways movement. It goes down here from 3 and up to 7 and then crashes to 4. It rallies back up again to 7 and crashes back to 4. It rallies up to 8 and goes back down to 5 and then goes back up to 8.
Imagine you bought this at $7 in November of 2010. It’s November 2012 and it’s $5.50. You’re incredibly frustrated. This is very similar to what the Bitcoin chart looks like. This is where Tesla went sideways for three years but it still ended up going to $1,200. None of this action meant that it wasn’t going to $1,200 but think about all the stories you would be telling yourself during this period of volatility and sideways action.
“This is no good. This idea doesn’t make sense. They’ve got no money. They’re going to run out of money. Nobody’s going to buy electric cars.” All of this negative self-talk happens when you’re in this sideways type of movement. This is why you can’t judge the quality of an idea by the price action. If the market was truly efficient, Tesla wouldn’t have traded between 4 to 7 multiple times during that period.
The reality is the market is highly inefficient, especially when it comes to disruptive ideas because many people are mentally lazy. They’ll say, “Why do I need to look at EVs? We’re making all this money in these other areas of the market. That’s too hard to deal with. I’ll do it another day.” That’s what creates an opportunity for us, the individual investor. We’re in 2014 and 2017 and we get this huge move higher. The stock runs to 53 and drops to 35. It runs to 58 and drops to 36. It runs to 57 and drops to 20. It runs to 53 and drops to 35. It’s constant ups and downs. People were panic selling right back up and down.You can't judge the quality of an idea by the price action. Because the reality is the market is highly inefficient, especially when it comes to disruptive ideas, because many people are mentally lazy. Click To Tweet
This is why so often when panic is ripping through the markets, you want to buy more on that weakness if it makes sense for you financially or does nothing but hold it. Go enjoy your kids. Maybe your grandkids. Go play some golf, spend some time with your friends or do something else. There’s nothing we can do about the movement. That’s part of the process.
That’s why we don’t want to check it. We want to sit it and forget it. That’s the nature of any asset that goes from being a small asset to a large asset. For any disruptive company or platform, the reason why you get this euphoria and then this panic is that the technology is not yet well understood. You have people in there that are coming in either as momentum players thinking they’re a believer in EVs but haven’t done the research to understand the technology and Tesla’s position as a leader within that tech. They see this massive spike down and think, “Something must be wrong here.” They then sell off. It runs back up again and we get another sell-off.
There were four years of additional sideways action. We get to 2017 to 2019. This is ugly. It goes from 30 up to 77. You crash down to 48, back to 77 and crashed back to 35. This is very similar to what the Bitcoin chart looks like in 2022. It goes sideways for another two years. A year later, it’s in the hundreds. How is it that investing world could make such a huge valuation mistake with Tesla? How does that happen?
All I can say is thank the Lord it does happen because this is what creates opportunity in markets. This is very similar to what we’re going through with Bitcoin. It went up to $69,000, crashed back down to a low of $30,000 and then traded into a low of $40,000. Nothing’s changed. This is still an amazing opportunity. If you’ve got more investible dollars, buy more Bitcoin.If you've got more investible dollars, buy more Bitcoin. Click To Tweet
That message may get monotonous. You must be thinking, “Jack, don’t you have anything else to say?” I’ve had plenty else new to say but this is something that bears repeating. Our job is to take advantage of it and not succumb to boredom. If you’re bored, go focus on earning more money and delivering more value to your clients. Let your assets be boring. They’re supposed to be boring.
If you’re into them for the long haul and you’re holding great assets for long periods, most of the time they’re probably going to be pretty boring. You’re going to have small, incredible and quick run-ups that are exciting but 95% of the time you’re going to be bored. Our job is to take advantage and not succumb to the boredom but it’s also part of that big payoff.
Where we got to stay focused on is the mass adoption that Bitcoin is going through. The amount of Bitcoin miners that are holding their coins is incredible. Most miners, including myself, can speak to this and attest to it. We’re holding our Bitcoin that is coming in from the mining operations. They’re not being liquidated on the market. Supply is going to be shrinking steadily.
Think about the incredible insatiable demand that’s coming to Bitcoin when the Bitcoin rewards credit cards get fully unleashed to the market. You’re talking about millions and hundreds of millions of dollars of Bitcoin that’s going to be purchased from those rewards cards. I don’t think there’s any other asset in the world that’s going to compound for you at this rate with as much certainty as Bitcoin.
We’re playing a different game here. Holding something that can go up 500 times is a mental game. My job is to find you great ideas but it’s also my job to give you that mental framework so you can be the person you need to be to be able to hold onto these assets. You have to change the way you viewed the world. I was playing my high-stake poker game and one of the guys I was playing said that he sold his Bitcoin because it wasn’t doing anything. I’m like, “Are you kidding me? What are you doing? That’s such a mistake.”
That’s his deal. That’s what he wanted to do. That’s a terrible decision. Part of the problem is we’re constantly bombarded with messages from the traditional media. They’re giving you all these kinds of new decisions that you need to make all the time. Remember, their whole job is selling, advertising and getting eyeballs and clicks on their content. It’s important to unhook from that and play a different game.
We want to buy great assets and let time do the heavy lifting for us because, over time, our compounded annual growth rate is going to smoke anybody else’s. We’re going to destroy your track record of trying to trade in and out of the next hot stock for maybe 3%, 4%, 5% or 10%. That’s a loser’s game. You can certainly allocate part of your capital with something like that but not the bulk. The bulk of your capital should be in top-tier assets that are going to compound your money at a high rate of return with a high degree of certainty over time. In my opinion, Bitcoin and Ethereum fit that bill better than any other asset.
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