Blind Investing

Welcome back to the Tribe! In this post we are going to talk about Blind Investing. The act of just investing in random projects, and ironically out performing the market on average. Seems to be a trend these days, so lets discuss why that is and how to invest with a little more long-term “vision”.

Nothing should be considered investment or financial advice. Enjoy the ride!

Blind Investing

Have you ever heard of the study where market markers let a monkey choose 5 stocks, and compare the year over year results to professionals?

Funny to find out, the monkey performed better than most of the professionals on average.

This analogy follows suit in crypto with the current market leading to insane gains across all coins.

A few months ago, we even had personal friends of ours reach out about investing in Doge.

They said:

It’s at $.05 man! Should we throw a few grand into it?

As you can imagine, we told them the risks, our thoughts and said it is really up to your risk appetite!

Clearly, we know how this story ends with Doge shooting to crazy new all time highs thanks to Elon’s trigger Twitter finger.

While this was the case this time, we certainly also know that 99/100 times – that is not the case. For every success story or crypto surging, there are plenty falling off the charts into the abyss.

Although, with the recent super cycle it seems that you really can’t miss. Basically, if Bitcoin goes up – the rest of the market shall follow the grandfather to the moon.

When does it stop? Where is the line in the sand for the common sense to enter back into the market?

Is blind investing really better than cold hard research and long-term approaches?

Monkey Investing

While there is a strong arguement to just throw your money in the market, we can’t ignore what will ultimately end up happening.

New investors enter the market, excited and bright eyed trying to set up their Binance and Coinbase account.

Over night they make a few grand off of small investments and bang! They are hooked like an old man on bingo night.

They double down, triple down, and they don’t pull their funds out ever because – It could go up more! They are experiencing what we crypto veterans like to call FOMO.

Fear of missing out digs in and makes them want to hold their position.

Why is this?

Because they are not experienced investors. These are average folks looking to hit it big. These are not calculated investments, they are lottery tickets at a new future.

In the end, we know how this plays out. It happened in 2013 with entire companies seeking bailout and claiming bankruptcy, again in 2018 with entire exchanges costing users billions when the fallout happened, and will ultimately happen again in 2022, or 2023 once this super cycle comes to pass.

Although, how do you prevent being pulled into these scam coins and meme coins long-term? How do you evaluate projects as a whole and not partially based on short-term gain?

Crypto Evaluating

An extremely simply way to do this is to look at the token economics behind an asset.

Here is an example thanks to a Reddit post we found here.

Token Allocations

Simply, if you just look at the token economics of a project you can save yourself half the trouble. Any coin or token with a majority of the supply held in single wallets,  by founding members, or even just secretly stashed is a red flag.

It is general advice to stay away from projects like what we are mentioning, especially if they have recently had huge run ups or extreme surges in price.

The next thing to consider is the team behind a project.

The number one question we always ask ourselves before investing in a project is – will this project survive a bear market?

Do they have utility beyond market price? Do they have a long-term roam map with OBTAINABLE goals?

If you think a project is not prepared for the worst, then they will probably not be here in the next bull market.

Crypto indicators

Other top indicators or red flags of a projects long-term success chances are:

  • A projects daily average volume – is there enough liquidity to pull your money out if you have to? Projects without liquidity tend to drive away investors.
  • Is the team real? This was a typical problem in 2017 with scam projects that had complete fake teams behind them.
  • Does the project’s timeline look obtainable? A common thing to do is list a white paper promising crazy developments and transaction speed in a year – which is always unrealistic and signals a red flag to investors
  • Is the project adding value to the market place? Why would this project need to succeed? What or who will benefit from it?
  • Does this project have any real partnerships that it can leverage to gain exposure? Real partnerships confirmed by both sides serve to bolster investor confidence.

Questions like these will quickly help you sort out the B.S. in the market from the bullish long-term HODLS.

Blind Investing Post

While we are happy of the market’s success, it really will only serve to hurt investors long-term when all the meme and scam coins hit the fan with a bear market.

We hope people take the time to evaluate each of their investments and determine if their portfolio is full of long-term hodls or short-term flips. If the latter, it might be time to capture gains.

As always do your own research and adjust based on your risk appetite.