Designing around my weaknesses – why eliminating skill from my strategy is the skill itself Many people get attracted to financial markets by promises of quick returns. You work a regular job and hear about this one dude who made retirement-worthy money in the crypto markets, and you’re intrigued. Is this your lucky ticket out of the rat race? Odds are , this story feels familiar, as most crypto participants got into this market simply because someone told them it could make them a lot of money in a short amount of time. And to be fair, that promise isn’t entirely incorrect. The only problem is that they generally only talk about the potential to gain a lot of money, while the other side of that potential is far more likely; losing a lot of money in a short amount of time. In fact, Roughly 90% of crypto investors lose money. A stark contrast to the fact that so far, almost everyone who bought Bitcoin and then held on for at least four years is in profit. The only exception: those who bought above $60k in 2021 – but even they were in deep profits not too long ago. Side note: Altcoins are a in a league of their own. They generally make all-time highs once and then struggle to make new all-time highs in the cycle after it. While exceptions exist, I don’t play them by the same rules as I do with Bitcoin. I’ll dive deeper into this in another article. This paints a clear picture: if you play the long-term game, it becomes significantly harder to lose money. The stock market has a multi-decade track record of proving this, and Bitcoin has followed a similar path so far. The reason for this is simple: we are not nearly as good at dealing with our emotions as we think we are. Analysing the market isn’t difficult, but as soon as we have actual skin in the game, our biology takes over. People have had to deal with fear & greed since long before the advent of the Stone Age, and it’s unlikely to change anytime soon. As such, I recognised that I was no exception to that rule and decided to build around that. In essence, recognising that you’re unable to outsmart basic human biology isn’t a defeat – it’s a victory that gets you on the right path to building a winning strategy. Design around your pitfalls, and those pitfalls suddenly don’t pose a threat anymore. In my opinion, the most skilful investors aren’t great at predicting the next market move, but they excel at building a strategy before the market moves at all. You see, if you have to make a manual decision during a market move, you open the door to those same emotions we’re trying to keep out. ‘Do I buy here, or do I start next week?’ is a dangerous question to ask. You want to address those questions before even getting started. My strategy is built to be as straightforward as possible. I want to eliminate decision-making completely. I set rules in stone beforehand, and then when the time comes around where everyone loses their mind – all I have to do is execute. It looks effortless, but that’s exactly where the skill is: it takes a lot of experience, skill and thought to design a strategy that requires zero skill to execute yet is able to make money in a market where 90% lose. In all honesty, running a Twitter & Slice profile doesn’t help here. While I enjoy sharing my thoughts on the market it forces me to spend more time staring at charts than I would need to do if I simply stuck to my plan and spent the rest of my time working a normal job or laying on the beach. This makes executing harder than it needs to be and has caused me to make a couple mistakes over the years. We live and we learn. Since I already detailed the building blocks of my strategy– including what it looks like in the future tense – in last week’s post , I won’t repeat myself. Instead, let’s look at the ultimate return on investment of this approach, because it carries another major return: Peace of mind. The hidden cost of trading is a mental one. Take a look at Crypto Twitter, it’s a sad place to be. People spend 18 hours a day staring at screens, rarely go outside, nobody has a girlfriend – you get the idea. When you try to outsmart the market, you’re selling your peace of mind for a game that is built to take your money. By swimming with the tide (markets are designed to go up over longer periods of time, after all), my brain gets to relax for the majority of the cycle. I have time to spend on hobbies, going out with my wife, and whatever else I feel like. Bear markets are unironically where I work the hardest, as that’s where I put emotions aside, and map out the plan for the next cycle. Conclusion This brings us back to the paradox of investing. I believe it’s not about staying clinical under pressure, it’s about designing in a way that takes away that pressure altogether. Accept your weaknesses, build a strategy around them, and let time do the rest. In the meantime, kick back, relax, enjoy a nice cocktail on the beach. Your portfolio will thank you for it.
