Sometimes you have to say an unfortunate truth:
I see a lot of blowhards on CNBC, the trader’s wallpaper, which I watch most of the day and most every day. As the Dow has tripled upward since 2009, from less than 7000 to 24000 and rising, these doomsayers have predicted the inevitable correction, sudden bear-market turn or cataclysmic crash, again and again.
They have been wrong, again and again. It would be unkind, in this generous holiday season, to name names, so I won’t do that… besides, you already know who fits the description.
One day the handwringers will be right: A crash will come, it always does. In the meantime, you missed out on HUGE gains if you listened to these on-air doubters. They know that no stockpicker ever got fired for causing a client to miss out on an upside opportunity. You do get killed, though, especially in a market panic, for meting out advice that results in your client’s losing money on the downside.
So, when chaos or catastrophe descends on the markets, TV gets timid. Most everyone utters solemn and somber warnings of more doom to come. Instead of searching for hope, they keep serving up fearfulness.
This bias toward timidity is something you should keep in mind if you are betting on bitcoin and the pixel pundits start with the dire warnings on the Bitcoin Bubble. You likely will hear all kinds of panicked advice— “You’re dead meat, man! Get out! Get out!!!”—and almost no reassuring words to help you ride out a decline.
Invoke “Hitchhiker’s Guide to the Galaxy”: Don’t Panic.
It is a difficult instruction to follow, given that bitcoin’s main driver is rank emotion and its path is so volatile. Yet volatility is a trader’s opportunity.
Right now, it’s a little scary, compounded by the lack of data to help us predict where bitcoin is headed: scant market data on trading trends, no news events that can be anticipated, no earnings flow on which to slap a multiple as we do for, say, Apple, no new-product unveilings that can stoke a stock price, no prospects for takeover activity.
Making things all the more obtuse is that bitcoin was designed explicitly with an emphasis on secrecy, privacy, encryption and invisibility, making it impossible to tr