Panic-selling in the hope of buying back when prices fall further...
That’s what DarkNubenYT did. He’s a young investor who’s just lost $31,500.
But it wasn’t his only mistake.
First mistake: panic-selling
In the opening lines of his Reddit post, published on 5 August 2024, DarkNubenYT explains that Bitcoin falling below $50K convinced him to sell his entire portfolio.
When I started investing, I learned that the golden rule was to buy when prices were low and sell when they were high.
DarkNubenYT did the exact opposite...
The question is why.
- Had he thought his original investment thesis through?
- Was he prepared to lose the money he invested?
- Did he understand the risks?
- Was selling a rational decision?
In my view, the answer to all of those questions is NO.
That might explain why he couldn’t hold his positions under the stress and fear.
Second mistake: investing mostly in altcoins
Further down, he writes:
"I mostly invested in mid-cap altcoins. All of them were down at least 50%. A few of my memecoins were down 80%, but they made up a smaller part of my portfolio."
Knock, knock.
Who’s there?
Reality, hitting you square in the face.
My take on this mistake? DarkNubenYT couldn’t accept that reality when it caught up with him.
Some investors like altcoins, memecoins and shitcoins precisely because their prices are so volatile.
They know they can make a lot of money.
They also understand and accept the other side of that: they can lose a lot too.
Apparently, our young investor hadn’t.
Third mistake: cutting losses in the hope of buying back lower
DarkNubenYT’s situation can be summed up in one sentence: "A string of bad decisions driven by fear."
How do I know?
Because he added this to his post:
"I also want to say that I have what’s left of my portfolio, which isn’t much, ready to buy back if I see lower prices. I feel terrible as a trader, but I didn’t want to wait years to see my money again."
Ouch...
I know what you’re going to say: accepting a loss and closing a position can be a very good decision.
I agree.
But that isn’t the situation we’re looking at here.