Wednesday, January 31, 2018

Losing Money by Making Less Money?

As mentioned before, one of the things that EVERYONE experiences when they come into crypto is the ever looming shadow of REGRET.

Sometimes it seems that no matter what you do, you'll end up regretting.

There is only one optimal solution, and there's infinite number of ways to do things sub-optimally and feel that regret.

Recently, I've been selling a small cap coin that I had bought several months ago.

For illustration purposes, I'd be simplifying some numbers, but the percentages are about there.

I bought into a small cap with 5 ETH a few months ago.
Today, when I'm selling it, I'm only getting back 3 ETH.

Crypto twitter OGs will tell you that BOY YOU ARE RETARDED JUST LOST 2 ETH. Which, mathematically, it is true. If you started with 5 ETH a few months ago and now you have 3 ETH, you just lost 2 ETH and made a loss of 40% in ETH.


But here's a catch. You need to have started with 5 ETH as your base. I didn't. I only had SGD and I specifically bought ETH with my SGD to make this investment.

My base wasn't 5 ETH.
My base was $1450 SGD, which was $1075 USD, which was $215 USD per ETH for 5 ETH.
My base was $1450 SGD, which just so happened to be worth 5 ETH at that time.

Now when I cash out the investment which is valued at 3 ETH, I get back $4440 SGD.

So if you listen to crypto twitter, I just booked a lost of 40% in ETH and I'm an idiot.
But if you listen to GMGH, I just made a profit in SGD of 200% over 4 months.

Of course, based on opportunity cost, if I had just bought and held ETH instead, I would have made even MORE money. But the fact of the matter is that at that point of time, I didn't want to buy more ETH. I felt comfortable with the amount of ETH I was holding and I only wanted to buy more of this micro-cap, which I bought using SGD and ETH was just the intermediary.

If I had decided not to do that trade, I would have not made or loss any money. Nothing happened.
But since I decided to do that trade, I made profits in SGD although I would have been better off just keeping ETH.

And that's the thing that people don't understand. I still freaking made money, jeez.


A lot of people like to carry cryptotwitter OG's balls by subscribing to their idea of what is right, and calculating their portfolio in BTC and their gains. I do not follow this idea. I don't even like BTC.

I just like money, lots of it.

You can do whatever you want though.

I'm just letting you guys know that blindly following random people on the internet isn't always really a good idea.

Final question of the day, to check if you were paying attention.

Someone had 1000 BTCs in 2011. Today he has 100 BTCs.
Did his wealth increase or decrease?

If you get the right answer, congratulations, you are not stupid!!!!!!

3 comments:

  1. Could I check with you, when you transfer money back from Gemini via bank transfer are there charges from Gemini? If I am not wrong, there are charges? So say if you transfer back 100 you get back 90?

    ReplyDelete
    Replies
    1. Hi Cheryl, the charges will be from your local depositing bank side, so you need to check based on your bank and your account. There are no fees from the Gemini side.

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