RE: Can anyone fully understand the markets?
"The market can remain irrational longer than you can remain solvent"
Usually, this is a problem when your investment positions are contrarian. In the short run you might lose, money but in the long run you will make money because the markets will "behave" like they are supposed to. The only problem is that sometimes markets stay irrational for a long time and you run out of money before you can see your investment pay off the way it should. An example of this is if you short Bitcoin right now. You know that Bitcoin 37,000 is too much, but can you maintain a short position long enough to make money on the coin crash?
The other case where this is a problem is if you have a lot of money in the market and the market is headed downward for no rational reason and you know that once the market becomes rational again then your investments will head back. The only problem is you might be bankrupt before the market recovers. This is what I took that phrase to mean. What are you thoughts?
Hi @therecantonlybe1
This is really a very good commentary, thanks for that.
I always base, to make some investment, in that I cannot put money in game that I cannot lose, this is a basic rule.
A friend once told me, if you're going to put money into something, practically forget about it, you have to be patient, the best investments are those that are made for the long term, they generally end up giving good dividends. Based on this, there's a recent history, Bitcoin reached 20 thousand in December 2017. Never again has it been able to recover that price, and I'm waiting patiently, because it was able to do so, is seeing the fruits of that investment.
But if he invested expecting rewards very quickly, he couldn't wait all the time...