I bought some Ethereum in May – the cryptocurrency hit a record high this week and at the time of writing my investment is up 62 percent.

There’s nothing like getting an investor to pat themselves on the back, but as tempting as it is to think like this, I’m not a genius at crypto investing.

Some will read this thought: “Crypto! I don’t care what that Lambert idiot did, it’s gambling, not an investment, and only an idiot buys that. ‘

On the other hand, others will think, ’62 percent! That Lambert fool thinks he did well? I bagged 620 percent. ‘

Peaky Blinder: Bitcoin hit record highs yet again, but investors tempted to applaud its skills should remember luck, speculation and its immense volatility

Ethereum is also significantly more than doubled compared to its price in the summer

Ethereum is also significantly more than doubled compared to its price in the summer

The bad news is, even if you find yourself in this position, you probably aren’t a crypto investing genius either.

I have a small amount of Bitcoin that I bought after the crash in early 2018, and it’s up 785 percent – but that doesn’t make me a crypto-investing genius either.

What has happened to those of us who are sitting on big returns on crypto – or any other investment – is that we got lucky and shopped into something that rose massively.

Some may have done more research than others, some will have a trading strategy, some will have been completely enthusiastic, but ultimately the main ingredients for oversized crypto profits were luck and a colossal speculative boom.

Whether you’re a blockchain obsessed, casual gamer, or, like me, a longtime stock market investor who’s dabbled in a bit of crypto, these elements are well worth considering – especially when prices are peaking like now.

It’s also vital to consider the role that crypto’s insane volatility is playing in this. There are Bitcoin hodlers who are convinced that it is digital gold, but since the beginning of this year alone, the price of this most famous cryptocurrency has doubled, then halved and more than doubled again.

It’s also vital to consider the role that crypto’s insane volatility is playing in this

As a measure of the volatile price fluctuations of crypto between the writing of this column last night and its publication on Thursday morning, the two leading cryptos Bitcoin and Ethereum were able to lose about 5 percent.

It’s a big step even for a small-cap stock, but it’s part of everyday life for Bitcoin and Ethereum.

It’s the memory of the “I’m not a great trader” stuff that will help you avoid getting carried away by a bull market, getting hammered by a bear market, and keeping your emotions in check.

Because, whether it’s crypto, stocks, or something else, overestimating the role your supposed skills played when something goes right and mistaking an investment for something special because you chose it are classic behavioral mistakes .

This was a common thread that investment strategist Joachim Klement of Liberum Capital entitled in his most recent note on Thought of the Day I picked this stock so it wouldn’t go down.

He highlighted behavioral investing research, which shows that stocks people own are valued higher by them than by people who don’t own the stock.

Klement added, “Plus, people will appreciate them even more when these stocks have a great story (narrative).”

The independent research he highlighted came from two Alicante University academics, Carlos Cueva and Inigo Iturbe-Ormaetxe, who ran a lab test on some fictional stocks and a real world test on some names of glamorous growth stocks.

Crypto seminar

In the lab test, participants were shown price movements on a selection of fictional stocks and asked to estimate future returns and were then given three stocks at random or were able to choose three that they liked best.

Before getting stocks, they thought they would get a positive return about 57 percent of the time, and if they happened to be given three stocks their future return estimates were similar, but when they picked three themselves, their expectations of future returns rose .

In the second experiment, six real glamor companies were featured, Alibaba, Facebook, Uber, Netflix, Tesla, and Zoom, and the process was repeated.

Again, those who were randomly assigned three had similar expectations about future returns, while those who picked three that they liked best increased their predicted returns dramatically from what they had said earlier.

Klement said, “Just because they actively selected these stocks did they think they needed to get a higher return, even though they didn’t think so before choosing these stocks.”

It is always wise to know when to count your lucky stars instead of applauding yourself as masters of the universe

And if we have already selected an investment and it has increased significantly, this effect will certainly be even more pronounced.

That’s not to say that you can’t employ practices, rules, and strategies that will make you a better investor and increase your chances of success, but it is always wise to know when to count your lucky stars rather than yourself as the masters of the industry to praise universe.

To get back to my Bitcoin and Ethereum investments, they may have increased significantly now, but there have been long parts of the periods when my investments have been under water.

Investments should also be looked at in isolation: they need to be viewed in conjunction with all of the other things you’ve bought and sold and how well they’ve done.

Don’t just think of the multi-excavators, but also the stinkers.

Encouraging us to ponder some of these common behavioral traps is a topic that runs through the best investment literature and books I’ve read – and I openly admit that as an investor I still tap into them on a regular basis.

Our special livestream panel discussion on Bitcoin and Crypto Demystified will take place on Tuesday, November 16

Our special livestream panel discussion on Bitcoin and Crypto Demystified will take place on Tuesday, November 16

A healthy look at such pitfalls is also a key element in The crypto trader, a book by successful investor Glen Goodman that I recommend to anyone thinking about investing money in cryptocurrencies.

I’m also excited to announce that Glen will be attending a special livestream panel discussion entitled “This is Money” Bitcoin and crypto demystified on Tuesday, November 16, at 1 p.m.

Our approach at This is Money has always been an open-minded but healthy skeptical look at crypto and the event will reflect that.

From Bitcoin, its history, and whether it makes a claim on digital gold, to Ethereum and Altcoin rivals, the event will examine the opportunities and risks of crypto and decentralized funding.

Our experts, including Glen and eToro cryptanalyst Simon Peters, explain how blockchain works, why it is seen as important and how innovative entrepreneurs develop ideas for decentralized platforms and applications.

So whether you are investing in crypto, are you considering it, or just want to learn more about one of the greatest financial stories of recent times, find out how to stream it live or watch it at a time that is convenient for you, use the link below.

> Learn more: Bitcoin and crypto demystified

We’ll answer your crypto questions too, so if you have an email at [email protected] and put crypto questions in the subject line.

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