There has been a lot of movement in the market this week with wall street bets – game stop, dogecoin, AMC… people are making money, hedge funds are crying in a corner… it’s all good until people start gettin’ rekt. I got this DM earlier today that I really want to make a response video to because I think a lot of people are finding themselves in this kind of situation right now which makes me super sad. So I’m going to talk through my own main two rules of investing – that if you also kind of take to mind … I think will you avoid being in the situation as this DM.
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So she basically wrote that she got caught up in the XRP pump and lost a lot of money. Not just any money – but the money she was saving to help pay for med school. Okay, so rule of investing #1 – Know what you are investing in. You need to really understand why it’s a good investment either because it has some fundamental value that you believe will go up over time – or as we saw with the coordinated wall street bets groups – there was a specific strategy on when they were going to enter and exit the market. SO for example – they didn’t buy GameStop because they fundamentally thought the company was really innovating and would be growing – they saw a way to exploit the hedge funds manipulation of the market and make some good money. But they still understand when and where to get out – where the people that ended up getting rekt probably didn’t’ really understand why it was going up… they just kind of threw their money in hoping to catch the wave.
The second rule that I always use when investing is don’t invest what you can’t afford to lose. I get it… it’s very tempting to see things go up and think you take this chunk and turn it into a TON more overnight and then just pay for all of med school. That’s a very tempting proposition… and some people DID do that…but on the flip side… if that doesn’t happen and you are suddenly out the money… then that REALLY hurts.
So in recap – understand what you are investing in and know whether it’s something you think has fundamental value(let’s say maybe bitcoin or tesla stock) that you want to hang onto for a longer period of time… or if there is a strategy for a quicker exit that you need to be in the know on to really make smart decisions about it. Second… only ever play with money you can afford to lose. I mean losing money always sucks… but basically don’t use the money you need for rent and groceries to go buy stocks.
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