Hello @jrcornel!
The concept of taking profits and related timing issues have been preoccupying me, so I was interested in your remark on this point. When he was alive, my wife's dad used to insist that if you are lucky enough to show a big profit in a position you should take your cash at risk off the table. That still looks like good advice.
However, I am increasingly asking myself "okay now that I am back into cash with the part that I had risked", what am I going to do with it? The problem is that in the days when he was alive the bank looked like a wonderful place to park various sums until you got around to deciding to do what to do with them. But these days? Oh well, that's another story!
The long and short of it is that I'm already having problems with the restrictions being placed on access to bank funds, so adding to them no longer strikes me as being a great idea.
I feel that "taking profits" continues to mean either going into cash for a certain amount of time or promptly moving the money into another attractive location. Okay, so let's say that it's the latter. My problem is that I don't have another attractive place at this point, and I always thought that I was just going to put my funds into bitcoin and forget them (treat those funds as being part of my virtually locked away money in the bank, and which I am ready to lose 100%).
Some serious discussion on this concept of "taking profits" could be helpful.
This has to be a decision every investor makes for themselves. If you believe bitcoin will be higher 2 years from now, 5 years from now, whenever you plan on "needing" the money, the best thing to do it just hold it. If you are trading around a core position that is something different entirely. I usually like to trade around a core position, meaning that I like to add when things look bleak, and sell some when things are over bought.
I believe you are correct, you could take the profits and put them into poor old Silver... but then you take a tax hit.
Or you could roll profits into alt coins... for potential outpacing of Bitcoin... but why.
You question what to put it in is stark, as there is really nothing better to hold... I purchased out of my C-Corp, so I couldtheorhetically take profits and offset the taxes for growth... but I can guarentee it is not growth like this.
So we all face this dilemma, but it could be worse I suppose, even dropping to 10k. My Plan is to live the HODL expression so nicely coined for such a question.
Thanks @kyusho and @jrcornel for your helpful comments. Since I never got into BTC as a trader, and do not now see an attractive place to relocate the cash that I had put at risk should I now take it off the table, my inclination is to just close my eyes and forget about what's going on with the price. After all, I had made my peace with losing 100% of this position if that should come to pass.
I like @jrcornel's notion of trading around a core position; but I have to say that if I was doing that in BTC these days I would probably have a heart attack around the issue as to whether I had made the right guess on timing each time I did something. I have bad memories about being always wrong on timing (or so it seemed) when I was an active trader of stock options.
The bottom line is that I suspect that on a big price crash, say back to the area of 9K, I would probably try to do what I did a few days ago and it was near 9K, and that is take some new money and add to my position.
It will interest you guys to know that at the time when I tried buying more a few days ago when it was near 9K I went over to an ATM, and there was a poignant message on the machine saying that the owner had closed down the service because the fees were too high the transaction backlog had become worrisome. If that's how he felt a few days ago, I imagine he must be happy today that he got out of the business!
We are certainly going to have to find another coin if we still want to be able to “send 5 cents to Africa”, which was the mantra about one of bitcoin’s key benefits years ago!
This is something every investor struggles with, I've been struggling with it for the past few months in crypto, maybe you can learn something from my experience...
Every time I sell and take profit off the table, I "miss out" on the run-up in price that happens a few days/weeks later. What I realized is that you just can't think like that. You have to, in my opinion, take a portion of your profits off the table and diversify into other assets if you're uncomfortable with the risk of only owning Bitcoin.
How much profit to take and where to place these profits are the next 2 questions you'll need to answer. If you're looking for high-risk, high-growth then I would recommend looking into some alt-coins or more Bitcoin. If you're looking for low-risk, medium-growth, income-producing assets, I recommend checking out a strategy called Dividend Growth Investing. (Disclaimer: This is not financial advice, do your own research please!)
My thoughts, what ever you put in, make sure you take that out and the rest is house money. Every investment you do that and keep stacking on that. Yet you take back your original principal. The rise in crypto is continue to take form but we all do not know when this will crash. At the very least if you take out what you started with you will really not lose anything. To take more than what you put in is definitely a plus but if you look long term I think best is to invest as much as you can that you are willing to lose. Just my thoughts.
Your view is exactly the position my step-father used to take, @mawit07. It's clearly helpful if you are sitting on nothing but flat or rising price trends (and you are long) among your various positions. However, if you have some losers on your hands, I think the situation is more complex as regards what to do.