“Buy When There’s Blood in the Streets“
“It’s counterintuitive. And that’s why investors regularly fail.”
That’s a line I remember from a business school professor I interviewed back in the ’90s while writing for The Wall Street Journal. He was talking about the most common mistake Main Street investors make: they buy high when everyone’s giddy, and sell low when fear kicks in.
They buy at the top and they sell at the bottom, almost entirely based on emotion.
Seems logical when you think about it.
Most of us aren’t paying attention to investing on a daily or even weekly basis. We’re living our lives… going to work… raising a family… mowing the grass…
So, we jump into a hot stock precisely because it’s hot and everyone is talking about.
Which is precisely the worst time to buy, because, well, everyone is talking about it. And they only reason they’re talking about it is because the price has already shot the moon.
That’s just about the point the price rolls over and quickly dies, retreating back from whence it came… and the weekend investor sells into the panic.
Buy high, sell low… The perfect recipe for wealth destruction.
Success, however, lies in simply reversing the strategy.
Don’t buy when everyone else is giddy about Asset X. Buy when everyone is scared of Asset X .
Which means now is the time you should be wading into the crypto market.
Bitcoin, now in the $86,000 range, is down about 30% from its highs. Bearishness permeates crypto at the moment, rooted in a couple of key factors:
- Year-end selling pressure.
Bitcoin hit a record high back in the fall. Lots of investors have been selling to lock in gains or those who are down are harvesting tax losses to offset gains elsewhere in their portfolios.
- Psychological factors.
This year was chock-a-block with deteriorating economic conditions. Jobs have been vanishing. The economy has lost more than 1.1 million jobs as of December, the worst showing since the COVID crisis. That’s largely a function of tariffs and deportations.
At the same time, inflation remains persistently strong, also a function of tariffs and deportations. That has the Federal Reserve in a quandary: cut rates to address a crumbling economy, or raise rates to address inflation?
The Fed isn’t sure. So, crypto investors are jittery… and they tend to flee when they’re scared.
Plus we have the Japanese central bank raising rates off the floor after 30 years, which is disrupting markets all over the world, especially crypto.
But all of this is the noise-of-the-moment.
Economies are always changing. Central banks are always doing something good, bad, or indifferent. Year-end selling pressure is an annual rite.
These are the moments when the savviest investors exploit fear. It’s the famous line from Baron Rothschild, a 19th-century British banker and member of the Rothschild banking family, who said, “Buy when there’s blood in the streets, even if the blood is your own.”
That’s hard for a lot of people to do because it feels so counterintuitive.
When crypto or stocks or house prices are tumbling, the natural inclination is to stay away. Preserve capital. Don’t risk your wealth. Wait until the bull market is running again.
The problem with that strategy is that by the time you feel like the bull market is running again, the asset in question is already up substantially.
Back in January 2023, amid the last bear market in crypto, I recommended that Field Notes investors put money to work in bitcoin in the $20,000 range and Solana in the $20 range.
By the time the media began ringing the bell to announce a new bull market in crypto, bitcoin had surpassed $100,000. Solana was up near $200.
Those who invested when they still saw the blood in the streets made out like bandits.
Those who waited for the bull market to signal its arrival… they’re the ones rushing to get out now with limited profits or even losses.
Me?
I continue to buy bitcoin and Solana every single week, religiously.
I don’t care about the noise.
I care about the future and where I know crypto is going.
As I noted in recent Field Notes dispatches, the world is rapidly adopting bitcoin and crypto. JPMorgan, Fidelity, Blackrock, US states, the federal government, nations around the world, business around the world, Mastercard, PayPal, and banks—and on and on—they are all diving deep into crypto.
For them, low prices are boon.
They’re buying the future at a discount.
That’s because the people making those calls to buy crypto are institutional investors. They’re not acting on emotion. They’re looking to tomorrow and prudently putting money to work in an asset class that represents the future.
I am too.
Wealth requires nothing more than buying the right asset, at the right price (often when others are fearfully selling), and then simply practicing a good bit of patience.
Now is the time to be a buyer of the best crypto assets.
Don’t dive in all at once. Dollar-cost average your way in, putting to work little pieces of your wealth every single week, religiously, regardless of price.
You’re going to be amazed at the wealth you accumulate by following such a simple strategy.
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