Perfect Timing? It’s nearly impossible = Average in!
NB — This information is for the long-term INVESTOR (…not the trader)
Note: Disclaimer below
Here is another question we get a lot of:
“I see the BTC price is coming down should I wait a bit longer before I get in?” OR “The BTC price has gone up a lot recently should I wait for it to come back before I get in?”
There should be no illusions here — this is a volatile and uncertain market. This is the case for every growing new industry on the planet and it is for this reason you want exposure to it in the years to come (how much? see: Exposure to the Blockchain? Yes, but HOW MUCH?).
So, how do you know when to get in? You’ve now witnessed friends who have gotten in really early and those who got in more recently and are now reeling in losses. This brings you both anxiety and excitement all at the same time. You also want to take the leap and support this burgeoning technology.
We think the most pragmatic strategy is to “average in” to your position over a few months. This is a long-term game and it is much more palatable to ease into the market. This way you have some skin in the game if the market starts to run and if it pulls back or corrects you have some fresh powder to get some exposure more cheaply than you anticipated. Both movements feel good, this keeps you in a stronger emotional state to make better decisions and gives you the ability to take this more pragmatic longer-term view.
What does “averaging in” look like? Basically, don’t put all your eggs in one basket i.e. do not lock in one price today especially in such a highly volatile changing environment. Instead break up your investment into say 4 pieces (100% into slots of 25%). Then, get your first 25% in as soon as possible as this will immediately get your focus aligned to the market. Over the next 6–8 weeks (c.20% of a 12 month period) acquire the next 3 slots on separate favourable occasions.
Favourable occasions occur when market pull-backs/corrections occur over 3–4 consecutive days or the market prices break through 3–4 week highs. We recommend setting buying-level alerts so that you don’t spend all day watching screens.
Guys, you are not going to time the bottom of the market perfectly but this process makes the entry more digestible and less stressful. Effectively, you are buying optionality and who doesn’t want options.
Another good approach is to allocate a small portion of your monthly income on a specific date into your Blockchain investment (rules!).
Now, this sounds simple but I am always amazed how many new entrants take 100% on day one and go all in baby! Then, the next few days are super stressed as they try to find reasons why they got in at the wrong moment.
Relax and ease in gracefully. Be calculative. Then, once you are in — enjoy the ride. This is 5-to-10-year call you are making — be actively patient. Make rules to only check in a sane amount of times during the day.
Here’s to stress-less investing!
Kenny
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Disclaimer: Any content published by Asymmetry Asset Management or its affiliates is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. The opinions expressed in such publications are those of the publisher and are subject to change without notice. The information in such publications may become outdated and there is no obligation to update any such information.
