Hey all,
I've gotten a few questions regarding if I believe their Altcoins will make a full recovery in the near future. While I personally have strong faith in our market, there is something a lot of people don't think about. The fact of the matter is, it is harder to recover from a loss than one may think.
Take a look at this sentence and tell me what is wrong with it:
If I am 50% down from my initial investment, I will need that investment to shoot up 50% just to break even.
While this statement looks correct at first glance, this isn't the case. Let's put prices to the equation. Let's say I have invested in a project and my initial investment is $1. The price takes a hit and each share is now trading at $0.50, or a 50% decrease. If we take the logic that "I will need that investment to shoot up 50% just to break even", well, let's see if the math checks out.
$0.50 * 1.50 = $0.75. See the issue here? If you lose half of your initial investment, the truth of the matter is that in order for you to break even, you need that investment to DOUBLE from where it is currently trading.
I know this is blatently obvious to some, but to others, it is a simple concept that you can easily mess up. Take this advice and understand what needs to be done for you to be sound with your investment. If that means take a loss, then take that loss. If you are a true believer, you can hold your position or even increase your position at good entry points.
As always, thank you for taking the time to read this post. If you enjoyed it, please upvote it and follow me for more content like this. Keep crushing it!
Alex
Nice observation Alex. I think this is an easily overlooked aspect of gaining and losing on the market, and it’s important to know exactly what your investments value is at all times, extrinsically and intrinsically. Keep it up.
Thanks bud. Always pumped to see a friend like my content. Keeps me motivated. Excited to see your next analysis. You've been doing great stuff.