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Opinion: Time in the market vs timing the market

Image: In the long run, time in the market beats timing the market.


Let’s take a quick look at the difference between trading and investing.

When you trade you don’t care which way the market goes as long as your position is making you money. All you need is to be right about the direction. For what it’s worth, even if you hold a shitcoin with absolutely no future and it pumps, you are making money - not that it wouldn’t resemble casino though.

When you invest you are looking for value and you put in money that you realistically won’t need even in a few years time. You go for value.

Which one is more profitable?

They say that in the long run, time in the market beats timing the market. With the short term direction you cannot know for sure - even technical and fundamental analysis together with Reddit sentiment can only give you what’s likely, not what’s hundred percent sure.

Realistically you have higher chance to be wrong in timing the market than you have when carefully picking an asset which you think has a long term chance.

Time in the market is so much more important for an investor’s long-term returns than timing the market. This is something The Motley Fool takes to heart, because no one can accurately know when to get in and get out. […] “Generally that tends to be true. But, alas, there are no firm rules here, and context is king in pretty much all of this. For example, there are times where valuations get super lofty.” - via The Motley Fool

Hodlers Hate

These days everyone hates the hodler cult in both BTC and ETH. The truth is though, as a hodler who is in a position for the long run, your biggest risk really is losing your position. And the best way to lose it is to try and sell high to rebuy lower. In a bull market, the low won’t be so low.

So, how should you look at an asset if you want to hold?

Investors look at the following characteristics:

1/ Real-World Adoption™ - That’s why Ethereum on Alphabay is bigger a deal than Raiden network or dapps even though both of the latter features are really cool.

2/ Transactions per day which is related to adoption, and other network data.

3/ Exchange volume per day and (anti)correlation with bitcoin to see how much of the use is just speculation.

Of course all cryptocurrency is still very young though.

An unlikely altcoin fundamental

What would happen if Ethereum lost Vitalik? Something quite explicit for sure, right?

“Go for a business that any idiot can run - because sooner or later, an idiot probably is going to run it.” - Peter Lynch

I believe this is a drawback of Ethereum as an investment asset. That doesn’t mean ETH wasn’t an outstanding trading opportunity just recently - but that’s precisely the difference between trading and investment. For the long long term, it’s a question how sustainable this is.

Now, compare it to other popular altcoins on the market.

I am sure there are people who believe certain coins are lead by idiots at present already, while other coins are quickly getting there.

You shouldn’t blame people for holding on to assets with slower development and moronic leads. After all the longer the assets are surviving this misfortune the more valuable they are for the long run.



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