Considering the state of the cryptocurrency markets, and the general FUD that always ensues. I thought it would be a good time to bust out this gem of advice that I was reminded of recently while discussing Chia’s price crash in my pool discord. Shoutout to jordanbray for posting this in discord. It’s a lesson new and old users of crypto can rely on. As an intraday trader myself it reinforces my strategies, and really drives home the difference between value, and price. The value of a commodity (like Chia) and the price of that commodity are vastly different in principle.
What we should all take away from the allegory of Mr Market is; don’t be Mr Market.
The intelligent investor written in 1949 by Benjamin Graham is one of the greatest books on the markets and investments ever written. There’s been numerous revisions of the book to suit modern markets at various times. But 1 story among all the financial jargon and mathematics stands out. It also perfectly encapsulates the way cryptocurrency markets operate everyday without fail.
That is the allegory of Mr Market. I’m going to loosely paraphrase it as there’s a crap load of information to dissect; it’s quite a read. I’d suggest nabbing a copy of the book on amazon but you can also find pdf versions online (click here to download). Anyways…
- “Mr. Market is an investor driven by euphoria and fear (FOMO and FUD?). He lets his emotions determine his investment habits, not logic and reason(like cryptocurrency investors). He will constantly come at you with prices and value based on how he is feeling and perceiving the moment. He never stops making orders and his constant manic shift in how he perceives a commodity; is the biggest determination in how he deals with it.” –
Now anyone who has read the allegory will know firsthand that it’s a very rough paraphrasing; and there’s a lot more to it. But it’s a great reminder as we deal with the daily price swings of Chia; that its current price, and its actual value are two vastly different things. We should use this knowledge to our advantage when dealing with Mr. Market. Most importantly not let his emotions determine how we value our assets.
- “When Mr market gives you lemons, make lemonade. Use his emotions to your advantage and buy when his prices are low and sell when his prices are high. Intelligent investors know the importance of timing and the diligence in understanding the value of our assets.”-
The Crypto markets are just thousands of Mr. Markets chillin out. There is no need to let them get you on the FOMO/FUD hype train. Stick to your guns. Value and price don’t always correlate; so don’t undervalue your investment in a panic and let others capitalize on your mistake. Do research and stick to your strategy. Don’t be Mr. Market!