Lessons for the next cycle
We're in a bear market and it seems like it's going to be around for a while. It's a little over 2 years since the pandemic started and we're back to seeing layoffs and continuous red candlesticks. Since 2008, slowdowns have been rare and even in 2020, when Covid just started, it was short lived. So this will probably be the first real recession I face as a working adult.
No one knows how long this one will last but like every previous cycle, the bear will be followed by a bull and then a bear and the story goes on. But looking back, there are a few keys things I learnt about investing which I will be carrying with me for future cycles
Investing is important. But invest most of your money in things which you have very high conviction in. Buy the things that you will never sell. This will be boring. You don't need to invest into many different things in the name of "diversification"
Always have dry powder ready. This is the reserve cash you keep to invest when markets fall drastically. But never deploy it all on the first or even second dip. Things will always go much lower. Preserve this dry powder as long as you can.
Dollar Cost Average. It's boring but very very effective.
When markets are jubilant, be fearful. "All time highs" means you need to be running the opposite direction. When "vibes" take over, run faster.
Take some profits when everything is up - usually +100%. It might feel like you're leaving the party just when things started to get fun, but this is the best time to accumulate some of the dry powder for the next party.
Hope to survive until the next one.
wagmi?