The Billion-Dollar Bitcoin Mistake: Don’t Invest in Hype
- Can you tell us what a cryptocurrency does?
- Most crypto buyers probably can't, and that’s the problem.
- You should never invest in something that you don’t understand.
If you don’t understand what you’re investing in, you’re going to get slaughtered.
Many people who bought bitcoin in 2017 learned this the hard way…
In fact, if you’d asked them to explain what the cryptocurrency does, most of them wouldn’t have been able to tell you.
Yet they bought it anyway. They fell for raving headlines or pressure from family and friends. And when 2018 rolled around, they were left holding the bag…
The total value of all cryptos dropped by as much as $700 billion in 2018. Bitcoin in particular fell by over 70%.
And for anyone who went all-in on cryptos like bitcoin, it was a disaster. Take Australian journalist Derek Rose, for instance. He lost $7 million in holdings and his entire life savings when the bubble popped.
But you don’t have to make this same mistake.
Only Invest in What You Understand
What those bitcoin buyers did wasn’t investing. It was buying into hype and letting the fear of missing out (FOMO) take over.
And that’s one of the worst things you can do if you’re looking to grow your money.
Instead, you should be sticking to simplicity. Real investments are things you can understand.
Think about some of the biggest companies out there like Amazon Inc., Netflix Inc. or Google Co. You could pull almost anyone off the street and they’d be able to tell you what those businesses do.
The bottom line is: You should only invest in things you understand. And great investors like Charles Mizrahi know this is one of the keys to truly making money.
Charles spent 37 years on Wall Street as an investor, money manager and hedge fund manager. He knows his way around all types of investments and markets. That’s why he focuses on high-quality stocks in his Alpha Investor service.
When it comes to stocks, Charles always tells me: “Buying a stock is simply buying a piece of a business.” So, if you understand a business and how it’s growing, you can be confident in owning its stock.
Think about it this way: If you can’t explain it, then you shouldn’t put your money in it.
This takes a lot of confusion or fear out of buying. It also means you’re less likely to be swayed by fanfare in the news or hyped opinions from those around you.
Instead, you can stay set on picking up high-quality businesses at bargain prices — and watch them grow your nest egg.
Now, you might not be taking advantage of the profit opportunities Charles identifies yet. But you can still take the guesswork out of making money by investing in exchange-traded funds (ETFs) like the Vanguard Value ETF (NYSE: VTV).
This fund has outperformed the S&P 500 Index — a benchmark of large-cap stocks — over the past decade. And management fees are only 0.04%.
The ETF invests only in large-cap stocks that are mispriced. Some of its holdings include Johnson & Johnson, Walmart Inc. and Coca-Cola Co. These are household names that most people are familiar with and understand.
And if you want to target more of the best and easiest-to-understand companies trading at bargain prices, check out how to become an Alpha Investor right here.
Managing Editor, Alpha Investor
P.S. If you haven’t already heard, Charles is hosting the first of many events featuring high-profile Americans who’ve received his research and recommendations. After having suffered financial setbacks, they’re finally starting to realize their dreams again.
This summit is just one of the many ways Charles is going to help millions of Americans just like you take back their financial futures and rekindle the American dream.
And on September 8, Charles’ first guest will be an iconic former governor who has an amazing story to tell. You won’t want to miss it, so stay tuned!