Once In A Lifetime
Familiarize yourself with the phrase “once in a lifetime” if you’re interested in finance, because you’re going to see it a lot. Every amazing trade is once in a lifetime — you’ve heard of many once in a lifetime trade’s already:
- early Bitcoin
- early Apple/Amazon/Google
- early Facebook
Maybe you’re seeing a running theme here?
There’s no such thing as once in a lifetime. Feel free to indulge in your regrets, think about the times you could’ve sold the top and shorted til the bottom. See how far it gets you.
The trade I’ll never forget is the trade I never made.
I was keenly cognizant of the Bitcoin bubble in the lead up to 2018. Being a Tether skeptic put me in a perfect position to be bearish and ride it. As the Bitcoin bubble finally started to deflate, I decided on a “brilliant” (read as obvious) idea: I’d short Overstock.
Most people involved in cryptocurrency are probably familiar with Overstock’s move into the space — it was tumultuous, to put it mildly. But here’s a summary for the uninitiated:
Before we even begin, let’s point out that the former CEO of Overstock, Patrick Byrne — called simultaneoulsy reckless, a genius, and crazy — has won some really wild lawsuits (including multi-billion dollar cases against Goldman Sachs and Morgan Stanley for naked shorting Overstock). He also speaks exclusively in hyperbole, calling the same people he won lawsuits against “Sith Lords” and “evil.”
Regardless, as the price of cryptocurrencies ramped up in 2017, Overstock and Patrick decided to dip their collective toes in the waters: they started a platform to trade tokenized securities called tZero and bought millions and millions of dollars worth of Bitcoin.
And Overstock’s price started to reflect these decisions:
The only difference was that OSTK’s top and subsequent collapse were timed shortly after Bitcoin’s.
So, in February of 2018, I reached out to my fiduciary to request that the little money I had saved be used to short Overstock. He… didn’t take kindly to my request.
Instead, he explained that Overstock was more than just Bitcoin and tZero, that I really shouldn’t be using reserve funds to make risky, volatile trades, and that he’d do everything in his power to make me rethink this ridiculous decision. I tried asking a few more times, with the same results.
And as Overstock began to shoot down like a dying star, my denial of being allowed to short this overvalued asset turned to anger.
This anger lasted an inexplicably long time — mostly because the longer I waited to feel better about it, the more value Overstock lost. “My fiduciary thinks I’m an idiot! I should take out all the funds and invest on my own.”
I was seriously tempted many times to draw the IRA down to nothing, take the penalties and tax hits, and invest on my own, because I was absolutely 100% sure that I could swing trade the market.
It took me until 2020 to finally realize how insane my thought process was — thankfully, I never acted on it.
Here’s the window into my mind over the two years after the trade:
- I’ve been buying and selling stocks with mom’s help since I was 10 — how dare the fiduciary question me!
- Shorting isn’t even *that risky*!
- I would’ve turned an 80% profit!
- Imagine how rich I’d be if I was the one trading!
But it’s nice to be able to reflect on that and understand how inane it really was. In the time I left the money with my fiduciary he was able to double my money — something I undoubtedly wouldn’t have been able to accomplish on my own. Indeed, I have no doubt I’d have made the one incredibly profitable trade, continued making losing trades, and ultimately not even have enough capital to cover tax expenses.
So I’m pretty damn grateful for my fiduciary, but I’m also very grateful for the value of FOMO.
Don’t ever let anyone — including yourself — convince you that there’s a “once in a lifetime” trade, that you’re much better at making money than others, or that you understand markets better than your peers. The entire purpose of FOMO and FUD (fear, uncertainty, and doubt) and markets in general is to learn.
Stay skeptical, friends.