The crypto test

Last Saturday night I found myself standing alone at a bonfire party, staring thoughtfully at the flames.

A guy walked up to me awkwardly.

“Would you like a beer?” he asked.

“Well, sure!” I said.

He handed me a beer.

“Now … can I talk to you about … Bitcoin?”

“Oh … kay.”

Truth is, I’ve spent a lot of time thinking about and learning about crypto, and the future of decentralised finance. It’s a fascinating area … but I think I may have wasted my time.

That’s because all I needed to do was buy the joke crypto Dogecoin, which, at the time of writing this, has returned a staggering 8,300% year to date (though the price is volatile and has dropped in the past few days).

Let me say that again:

The best-performing cryptocurrency stretching back six years — the top dog — is Dogecoin.

Remember, Dogecoin was set up as a ‘piss-take’ by its Aussie founder. It has zero tangible value. It is worthless.

And to prove what a ‘chump’ I am, I wrote about the dangers of Dogecoin in this column 10 weeks ago … and since then it has increased by 400%!

Woof, woof!

So do I feel a twinge of regret for not getting in?

No.

For much the same reason that I’ve never contemplated putting 1% of my net worth into the pokies (“Just in case, you know, I win the jackpot”).

Here’s the point:

Life is really hard when you believe you can make a quick buck from magical dog memes.

It’s stressful being a gambler.

There is no skill involved, and the odds are stacked against you.

You see, in order to make real money you have to sell. And every man and his dog is planning to sell out of Dogecoin right at the top. Every single one of them. It’s called the ‘greater fool theory’ (i.e. you only win when some greater fool buys in at a higher price), and history is littered with people who abruptly discovered that they in fact were the fool.

Wise old billionaire Charlie Munger advised: “The first rule of compounding is to never interrupt it unnecessarily.” In other words, you’re being tested right now. If you’re persuaded to sell your boring index funds and lay down with dogs, I can almost guarantee you’ll eventually end up with financial fleas.

Tread Your Own Path!