Why patience is a great “virtue” in investing

Clearly, one important prerequisite is a deeper knowledge of the markets’ fundamentals, but there are certainly others that contribute to success. The human factor in decision-making is what sets investors apart, and it is what makes the game even more exciting. Human factors such as psychology, appetite for risk, fear, arrogance and greed are some examples of emotions that just about everyone has experienced when investing.

With the crypto market taking a breather and activity sharply lower lately, the cryptonomy team wants to remind our readers how important patience is in the marathon of investing, as we have received quite a few private messages with questions such as: “What will the market do?”, “Has the bear market started?”, “Will Bitcoin see $60,000 again soon?”, “Will Ethereum reach $10,000?” and the like. Lately we have chosen to stay out of the crypto market, having cashed out a very large part of our portfolio.

During this period (based on the signals the market is giving us), we have armed ourselves with patience, and we believe this is especially important. Patience is an essential virtue for every investor, since every market demands it in order to pay off over  time. 

It is obvious that quite a few investors have been psychologically shaken by the May 19 sell-off. Of course they have!! After all, if we think about it more carefully, it is not normal, or at least not usual, to see your portfolio deflate by 40% in a single day. We completely agree, but we must not let our egos take over and assume that what we believe will happen. On the contrary, we must sense the signals the market is sending us. The market is clearly “taking a breather” right now, as trading turnover is thin and volatility has long since dropped to single-digit daily percentages. 

Traditional theories say that a calm period is followed by a new move, as the market picks a direction. For this reason we are being patient, so that we can draw up our next plan.

The cryptonomy team, like everyone else, would like to predict the most likely scenario (based on the data) for where the market is heading. Technically, a medium-term downtrend has taken hold, which runs counter to the long-term uptrend. That fact alone advises us to be quite skeptical about what comes next. Because if the trend turns into a long-term downtrend, that will happen in the near future. In that case we will have a “bearish consensus,” i.e. agreement between the medium-term and long-term trends that the market is bearish. 

In the opposite, bullish scenario, the medium-term trend will simply turn up, and then we will have consensus for a rise from the medium-term and long-term trends at the same time. In either scenario, then, patience is needed to see how things develop.

To sum up,  we are waiting for consensus across both of these time horizons (medium-term and long-term). Let us remind you that in the world of investing, psychology is a key ingredient of success!

Patience is a great virtue in the markets, and if used correctly, all it can bring is less stress and more profit.