Taking Losses and The Humbled Investor: Ego is the Enemy

I finally had the courage to go check my old crypto and stock trading accounts, to review  the investments I made in 2020 and 2021. Yikes. A massive sea of red. Most of my crypto investments were 90-98% down. 

I went into Q4 of 2020 with arrogance and euphoria. After some very good startup exits & exits in general in the year, lots of markups, I thought I was smarter and better than I was. Plus with the craziness of the ZIRP (Zero Interest Rate Phenomenon) era, it seemed like everything was going up. I admit I got caught up at the top of the cycle. Nothing like a bunch of money in your pocket to make you get cocky and stupid. I went big into investing in startups, VC funds, crypto and stocks. Well, no surprise, post-2022 many of these investments are not doing well. Especially my crypto and startup investments. 

Nothing like big losses to humble you.. Reality smacks you in the face and you are forced to learn and rethink your investment thesis. I learned I clearly did not do enough research. I learned I needed to concentrate my investments, or else I might as well just invest in Index Funds. I learned DCA aka Dollar Cost Averaging is your friend, as slow and steady is better for my personality. 

I learned that investing at the top of the cycle for startups is bad for your portfolio. My 2021-2022 vintage portfolios are pretty god awful. Not like investing in Chamath SPACs awful but pretty close. Yet at the same time Power Law is truly amazing, in Venture Capital and stocks. That winners sometimes can more than make up for all the losses. 

And I learned that no matter what, no matter the preparation, you will inevitably have losses. You will always have losses & bad investments. That’s the game. No risk, no reward. So take your losses, learn the hard lessons and keep on going. Stay in the game and use the power of compounding both in capital and knowledge to your benefit.