Peter Lynch is one of the greatest investors to ever live. His Fidelity Magellan Fund averaged 29.2% annual returns, and his often cited as a true financial genius.
Recently, I read Lynch’s classic guide One Up On Wall Street. While written in the early 90’s, it’s advice is timeless. In fact, the book contains two important lessons relating directly to BitCoin. And if you’re a crypto enthusiast, take heed.
Both principles are crucial to your financial success and mental well-being.
In fact, reading them quickly cured me of my “No Coiner Regret” and it’ll do the same for you.
Here we go!
1. Never Count A Missed Opportunity As “Lost Earnings”
I often kick myself about not buying BitCoin when its price was low. I knew about crypto then, but “sensible relatives” talked me out of investing.
This regret isn’t unique. People have kicked themselves for missing a “sure thing” for centuries.
And, in the end, nothing is gained from this constant worrying about the past.
As Peter Lynch explains:
We’d all be much richer today if we’d put all our money into Crown, Cork, And Seal at 50 cents a share (split adjusted)! But now that you know this, open your wallet and check your latest bank statement. You’ll notice the money’s still there. In fact, you aren’t a cent poorer than you were a second ago, when you found out about the great fortune you missed in Crown, Cork, and Seal.
This may sound like a ridiculous thing to mention, but I know that some of my fellow investors torture themselves every day by perusing the ‘ten biggest winners on the New York Stock Exchange’ and imagining how much money they’ve lost by not having owned them. The same thing happens with baseball cards, jewelry, furniture, and houses.
Regarding somebody else’s gains as your own personal loses is not a productive attitude for investing in the stock market. In fact, it can only lead to total madness.
Lynch continues:
The worst part about this kind of thinking is that it leads people to try to play catch up by buying stocks they shouldn’t buy, if only to protect themselves from losing more money than they’ve already ‘lost.’ This usually results in real loses.
If you sell your BitCoin and the price goes up, or miss a dip, don’t beat yourself up. You didn’t actually lose anything, and there’s always another opportunity right around the corner.
2. Never Set A Fixed “Sell Point”
Waiting for BitCoin to hit a specific price before selling off is something which caused me true anguish in the past.
And reading Lynch’s book made me wish I’d learned this advice earlier.
I’d buy a BitCoin dip, decide to sell off once the price reached $10,000, and (right on the cusp of reaching my goal) the whole market would collapse.
Luckily, Peter Lynch explains how to avoid this issue:
In my experience, no downtrodden stock ever returns to the level at which you’ve decided to sell it. In fact, the minute you say ‘when it gets back to $10 I’ll sell,’ you’ve probably doomed the stock to several years of teetering around just below $9.75 before it keels over to $4, on its way way to falling flat on its face at $1.
While I certainly wouldn’t call BitCoin downtrodden, Lynch’s advice still rings true.
Once you’ve bought the dip and gotten comfortable returns (I aim for anywhere over 10%) you might as well sell.
Final Thoughts
One Up On Wall Street is a terrific book, and the whole thing’s jam packed with quality advice from Peter Lynch. There’s tons of important information on choosing an investment, looking for unique advantages that are exclusive to a particular asset, and learning to master your own emotions when buying and selling stocks (or crypto currencies).
I’d highly recommend picking a copy up off Amazon.
P.S. BitCoin surged past $9,500 last week. Now it’s experiencing a small dip. If you want to capitalize off this, invest with CoinBase. They’ll give you $10 in free BitCoin when you sign up through this link.
