“It was the best of times, it was the worst of times…” Charles Dickens
The longer I’m around, the more I find the word on the street actually gives pretty good investment advice. I know this goes counter to what most people say. But consider this: When gold was at $1,800 an oz. everyone knew it was going to $5,000. When silver was at $50 everyone knew it was going higher. When the euro was at 1.60 it was just pausing on its push up to 2.00. When APPL was at some really big number everyone knew it was going to some really bigger number. And the list goes on.
THE BITCOIN RAGE
Coincidently, over the past three weeks, I’ve had three conversations about Bitcoin. Two were pretty similar and the other guy was on the bearish side. Perhaps these first two play the part of Sydney Carton (at least when investing is concerned). Both of these guys are in the tech field and love their software toys and Mac products (I don’t even own an Ipad – though I think my wife might change that Christmas morning). They look for investments that will turn into “the next Google” (ok, now I’m dating myself).
When my first friend asked me what I thought, I said I hadn’t heard of it and it sounded like a stupid concept. (he was bullish). When my second friend asked me what I thought, I said I had heard of it and read up on it a little and didn’t really understand how the valuation was determined. He told me it was the next best thing, going to replace the dollar as an international medium of exchange and an amazing concept. I think he and my wife talked about it for half an hour at a party we were attending. Sydney knew people who got in at $400 and were riding high. Heck, the Chinese were buying boatloads of this stuff.
SMART MONEY
Then last Sunday my friend Charles Darnay and I are sitting down having a burger and beer and naturally the subject of Bitcoin comes up. Charles here is a small business owner and also one of the most successful stock traders I know. We talked about the fundamentals and our thoughts on the concept and all that, but the most memorable thing he said was “just wait.”
Well, I expected we would have to wait more than four days, but his words were prophetic.
The moral of the story is, watch out for what the guy on the street tells you. By the time he has heard of whatever-it-is the smart money is looking for something else. Or perhaps the moral of the story is, by the time the Chinese let everyone else know they’re buying boatloads of something, they’re actually releasing a news article enticing everyone else to get long so they can sell on the way up.
You can make a lot of money on a whatever-it-is product. But by the time everyone is saying “I knew I should have gotten in at XXX” it’s probably time to get out.
