Crypto Investing Wisdom: Insights From Coinbase’s COO

At a recent technology, media and communications conference run by JPMorgan Chase, Coinbase (NASDAQ: COIN) COO Emilie Choi made a statement that will resonate deeply with seasoned investors and newcomers alike.

When asked about the current phase of the crypto cycle, he dodged the question with great insight: “So I’m smart enough not to make predictions about where we are in the cycle because I’m sure I’ll always be wrong.”

It was just a phrase thrown around at the beginning of the conversation, and the conversation soon moved on to a detailed analysis of the current crypto market. But it stuck with me long after I moved away from the broader presentation. Choi’s self-deprecating wisdom underscores a critical lesson in all forms of investing: Trying to time the market is a fool’s errand.

The meaninglessness of market timing

Investors are often tempted to time the market; They buy at the lowest point and sell at the peak. This is a great idea when combined with a long-term mindset, but a dangerous idea if you’re chasing the thrill of day trading and get-rich-quick gimmicks.

Even the most experienced professionals admit that it is almost impossible to accurately predict market cycles. The crypto market, known for its volatility, further compounds this challenge. While it may be tempting to get in and out based on short-term trends, doing so often leads to missed opportunities and significant losses.

Here at The Motley Fool you’ll often see a different approach: Time in the market. This strategy involves buying and holding investments over the long term so that they grow and compound over time. Master investors like John Bogle and Warren Buffett have always viewed compound returns as the true magic behind wealth-creating investment results. Every little incremental value sets you up for even bigger gains in the future, and it’s an exponential effect.

Historical data supports this philosophy and shows that long-term investments generally outperform frequently traded investments. Emilie Choi follows a wise doctrine here, following in the well-worn footsteps of world-class role models.

Why does time in the market work?

As you continue to invest, your returns can compound, meaning you will earn returns on your returns. Over time, this effect can significantly increase the value of your portfolio. Generally speaking, economic markets tend to appreciate over the long term, with occasional dips, declines, and crashes. As you try to ride out these inevitable pullbacks, you’re just as likely to miss the next big rally instead.

The story continues

Constantly monitoring the market and making quick decisions can be stressful. A long-term strategy allows you to focus on other important aspects of your life without the worry of daily market fluctuations. Opportunistic investors should be ready to buy more stocks, funds, real estate, or cryptocurrencies on declines. More cold-blooded wealth builders can instead use the dollar-cost averaging strategy, continually adding funds to their favorite investments over time, regardless of short-term price movements. This approach can even be automated.

Never forget that investing can be an emotional exercise. Decisions made in the heat of a market rally or economic panic often lead to buying high and selling low; The exact opposite of a successful strategy. Staying calm will help you avoid these common pitfalls.

Applying the idea of ​​”time in the market” to crypto

The inherent volatility of the crypto market can make long-term investments seem daunting. However, time principles in the market also apply here.

It’s important to do your research and choose cryptocurrencies with solid fundamentals, but a cool-headed long-term approach can mitigate the risks associated with short-term fluctuations. As long as you invest in solid names with long-term promise, unpredictable fluctuations in the market will not matter.

Remember, there will be ups and downs in the market, but a disciplined and patient approach can help you weather the storms and enjoy the sunny days that follow. The president and COO of Coinbase gave me a much-needed reminder of this core philosophy today. As a long-time Coinbase investor, it’s truly inspiring to see him approach his C-suite job in a volatile industry with this humble mindset.

Should you invest $1,000 in Coinbase Global right now?

Before buying shares in Coinbase Global, consider:

The Motley Fool Stock Advisor analyst team identified what they believe are the 10 best stocks for investors to buy right now… and Coinbase Global wasn’t one of them. The 10 stocks that made the cut could deliver monster returns in the coming years.

Consider that Nvidia made this list on April 15, 2005… if you had invested $1,000 on the date we recommended, you would have had $671,728!*

Stock Advisor offers investors an easy-to-follow success plan, including guidance on portfolio construction, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of the S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of May 28, 2024

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Anders Bylund has positions in Coinbase Global. The Motley Fool has positions in and recommends Coinbase Global and JPMorgan Chase. The Motley Fool has a disclosure policy.

Crypto Investing Wisdom: Insights from Coinbase COO appeared first by The Motley Fool