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The Risky move
Obviously it's no secret that risk can equate to gains, but let's not forget that it can equally equate to loss. So, in my mind the strategy some are suggesting is best suited for those who have high tolerance for risk, those who if they miss the mark, won't be cursing at the clouds and trying to find someone who deserves to be punched.
What I've heard some fellow Steemians suggest is to sell STEEM at these prices, wait for it to go into septic shock at $0.50 or so and then rebuy it all. In theory said move would double or triple your current holdings, but It does not take a rocket surgeon or a brain scientist to calculate what could happen if you are wrong. (yes, you read those right)
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Math time...
Yes, I know, you don't like it, but always remember to never forget: Math is your best friend, but you gotta let him help you. Ok, so the following little exercise should be clear enough for anyone who is attempting to do any kind of trading. If you don't understand it, don't feel bad, but feel free to ask a thousand questions, because it's very important to understand before jumping in.
Question.-
Mary has a $50 Dollar Budget.
Mary buys an apple stock for $50 because she is certain that she's going to make some money. It's cheap, it's been tanking, its soon to run around. Mary sees the value of her stock go up to $60 bucks so she sells her stock. Soon after, she sees the stock keeps on climbing, so she decides to buy again at $70. Then, once it reaches $80 she sells it again, because she knows it could tank any minute.
- a) $10
- b) $20
- c) $5.0
- d) $0.0
I used to think that these type of question was simple to answer for most. However, at the expense of sounding a little mean, I've recently discovered this is not the case, hence why I'm making this silly little example.
I don't care about apple @meno
Yes, I know, I don't like them either, but my point is this. If you are taking a risk by selling your liquid steem hoping it will go down, and if it actually goes up, you won't be in a better position. You would effectively have lost influence on the platform even if the valuation of your tokens compensated for the SP amount.
The safer play
Keep on posting, keep on accumulating tokens. Of course, there is no such thing as a risk-free move, I think the concept is absent from the cryptocurrency world. However, as the price of Steem goes down, you can effectively collect more tokens to "fight" if you will the devaluation of the currency.
I know some people might be thinking. "Oh, but it's painful to see the amount go down like that... my wallet is shrinking... " - The old saying comes to mind. "You only lose if you sell"- That's my current attitude and for now I'm not paying attention too much to what the USD number says.
Put the SP to work
If you are not feeling too motivated to post and interact, there are other choices for you. You could delegate it to an initiative, you could sell votes through @smartsteem (strongly recommend it) - or you could use @minnowbooster's market and delegate out for a nice APR.
It's important to say that doing any of the things I've listed here does not negate the possibility that you could be doing something else. At this point in time, I'm doing everything I can to increase my SP holdings. I'm on SP gluttony mode and that is the move I'm most comfortable with.
What are you going to do?
Specially if we go under a dollar. Are you going to reverse mortgage your home? (im kidding, dont do that please). Are you going to stay put? Are you going to post some more? Or are you going to go in full hibernation mode?
• Very Special Songwriter Shop Talk Featuring Serena Matthews @paintingangels
• Comparison is the Killer of Joy
• Remembering Pascal - Taking care of our planet
• Why the hell not? - Trying out Dlive
• I guess I'm a bank hater...
She really did make $20. It's true she could have made more by playing differently, but she has $20 more than she would have if she never heard of Apple. She started with $60 ($50 to buy at $50 and $10 she used to buy again later) and now she has $80.
Of course if she's paying anything in fees she's screwed, so hopefully she's a Robinhood investor.
I still think accumulating Steem is a good plan for me, but if the price goes down much more I'll have to switch some of my effort into earning USD and buying, rather than earning it here.
Mary spends 50, sells at 60 makes 10 bucks profit..
She rebuys at 70, now that means she's negative 10 in her holdings. She had to spend 10 more.
Mary's balance -10
Stock goes up another 10, she sells... she's effectively at 0.
Edit.-
The assumption here is that she could go above her budget of 50 to even continue.
Now I'm going to make a post called The controversial Mary
That's not how this works.
Mary starts with $60 cash. I'm sure that's not all the money she has in the world but it's what she's investing today.
She spends $50 on AAPL and keeps $10.
She sells AAPL at $60, now she has $70 cash.
She spends $70 to buy AAPL and now has no cash.
She sells AAPL at $80 and now has $80.
Oh, to clarify... Mary starts with only one stock of Apple... only 50 monies....
That was her investment budget.
It works the same if you want her to start and end with stock. She spends $10 in cash but ends the day with a stock that's worth $30 more for a net gain of $20.
You are forgetting the fact that she is breaking her budget. She had to extract money from outside her budget.
So it would be a Steemian selling his steem, then having to spend more bitcoin to buy the same amount of influence he/she had.
That's the message. So, we could say... yes you have the same amount of steem, yes it's worth more... awesome.
But... you had to take from your BTC holdings to do this.
You are using the example incorrectly if you're trying to illustrate some sort of point...
She never sells at a loss in your example, it's quite simply 20 dollars gained.
It's all fungible.
If I spent $10 in BTC to move from $50 to $80 in Steem I can just sell off $10 worth of Steem to buy the BTC back, now I have $70 worth of Steem. The fact that I would have $80 worth of Steem if I'd just wandered off after the first buy doesn't matter to my overall profit except that I didn't do a very good job of maximizing it.
Am I in a worse position than someone who just stuck around in Steem? Sure. They made $30 and I only made $20. But that's just FOMO in more complicated language.
Hi meno. Glad you clarified as I also worked out she made $20.
I wrote a more palpable explanation to the reasoning. As it would apply more to us steemians.
She had $50 and got $60. That's $10 profit.
She spends $70 (the initial investment of $50 + her $10 profit and another $10) and sells for $80. So she's was able to get back the $10 she invested earlier and that makes her break even...?
you got it... she broken even.
I thought I was going crazy haha ;).
Steem rule #7892: If you question whether you're going crazy or Meno is, there's a good way to bet.
Well, it's no secret my branium has some glitches in the code. But there is a method to my madness.
Ok I'm dumb. Why is it a big fat zero? I definitely read it fast and immediately spat out 20$ and I am unsure how to modify my current understanding of the problem to get 0$.
Or maybe.... Are you using the current time frame to put the cost of selling the first share to be -20? I'm not sure I agree with that point of view.
Look what I responded to poly.
She has a net profit of 10$.
50$ is her initial capital. She sells at 60 and has a profit of 10$. Now she takes a loan of 10$ to pay 70$ and sell with another profit of 10$ at 80$.
Your solution would make sense if you would take the 70$ as initial investment. But her initial investment was 50$. Her portfolio at the end of the year is 80$. So a difference of 30$. She has to pay a loan of 10$ and 10$ (from 60$ to 70$) she wasn´t in the market.
I'm going to ask @eonwarped and @tcpolymath to help me come up with a better way to explain my point. Because I've confused a lot of people here.
There has to be an easier way. Look at my own comment on this, maybe that will make more sense.
Your point, perhaps, is that if you want to have more Steem at the end of the day then it's a bad idea to sell it.
Your math is still very wrong, however.
How did you actually come up with that? Did you read this argument on another blog or is it a shower thought? ^^
As far as I can tell @tcpolymath and @eonwarped don´t agree with you so why should they explain your solution to others?
They are both dear friends. And honestly, I'm not sensitive about these things. My goal is to convey a message for my fellow Steemians.
Me replying with a little meme to poly is just a sign of two friends being silly.
Edit.-
Regarding the shower thought... I'm always coming up with crazy stuff... hyperactive brain... not that everything I come up with has merit. But im not shy about sharing.
I actually think this is a buy opportunity for Steem. I joined Steem recently because of the prices. I see Steem is an investment vehicle where you can either sit and received passive income or work a bit and deliver good content with hopefully good rewards.
Like Meno said put the SP to work!
In my case I invested in 1000 Steem and I am trying to deliver good content on a daily basis.
Cool blog Meno! Following
Hey bud, thanks for reading. I've started a controversy with Mary here... but I love the fact that we are talking about growth!
All the best in your Steemian journey!
Did Mary get her $10 !? just kidding.
Cheers and keep up the good work.
Hi Man! Hmm so maybe a huge sell off huh? I read Dan had started a powerdown and so thats a sign there. Its then the question of much you believe in crypto and need if it will really give one freedom then one wont sell 😂 50 cent steem?! Thats a bargain! Like you say we can loan it out, or sell votes, which i need to arrange still ! Steem is a dpos coin, one of a few,and thats the determing fact that steem will be a top crytpo used in the future 😊 i even paid 4usd for a small percent of my Sp and im not fussed about that!
Great post as usual! Personally i see that actifit is a good thing to do with the Sp instead of powering it down
Actifit seems pretty cool... I'm waiting for some SP to come back and I'm going to delegate a bit... I saw @flawy talking about it... Seems like a ninja idea.
I also reorganised my delegations just before i found actifit, I wanted to give more vote rewards and saw that there was no cool deals on MB to loan out, so the next best thing? -Delegate to get free tokens and to support the project! Oh and a great app, something I can use in my busy lifestyle without having to be staring at pixels hahahahha!!
I don't ever buy a new phone until the one I am using has completely kicked the bucket, and today the smashedness of the screen is effecting the function, so soon I will have to get a new one. This time I will get one that holds a million apps so I can be more contactable on discord :P
ps, the link dont work, typo? :)
oh gosh... you are right.. I fakenewsd myself.. its @flauwy
Happy to hear your thoughts about Actifit !
We're just happy to have @movingman on board our Actifitters and supporters, and looking forward to having you as well !
just delegated 150 Steem - the project seems cool, and it has some respectable trusted Steemians on there. Risk = 0
Even if it flops (which i dont think it will) the idea is great... lets hope for SMTs to get here before the year closes.
Thank you !
Yes we believe Actifit has the potential to disrupt the fitness industry, and grow with Steem to a whole new level. The community's response has been great, and this is the needed confirmation that our efforts are put in the right place.
We've also received some signs that SMTs are getting pretty close, let's see how soon !
hey brother.. i delegated the SP yesterday. Is there a way to confirm it's registering or something.
I mean, I know its there.. I see it... I'm just not sure there is something else I should have done to start collecting coins, if that makes any sense.
I wish we'll see $2+ by the end of the month but it feels more likely that we'll go below $1. Either way, I'm here to stay.
as they say in japan Tatakai!! (anime reference)
Hell yeah! Attack on Titan is awesome, that's probably where I was able to pick it up, even though I've heard it in other animes aswell.. :D
Why the hate for Apple?? lol
Seriously though this was a great post man and cemented my belief in staying the course no matter what.
I’m on a mission to accumulate as many of these STEEM things as I can :)
Posted using Partiko iOS
Oh man... i got a lot to say about apple. But I got a video for you, it will say it all...
ha ha ha ha oh man. that’s great. and i agree. the soul of that company died with steve jobs. they forgot that simple made them remarkable.
Posted using Partiko iOS
Did they really die tho? They just made U.S. history today.
https://steemit.com/news/@ross-early/apple-the-trillion-dollar-company
Well, when it comes to smartphones and crypto holdings, apple is surely much more secure than android.
im a nerdy nerd, so i run a linux box atm... but of course, its not for everyone.
Preach it! This is the fire of faith. May I bring a verse?
Hebbrew 11,1 Now faith is confidence in what we hope for and assurance about what we do not see.
For me its similar in our case here right now.
As you said both groups of people could be right, those who sell to minimize their (maybe) loss if they sell. Or people who take this as an opportunity to accumulate more SP. Let's face it. No one knows the future but this could be the last opportunity when you plan to invest in STEEM to get in on this price level.
On the other hand, of course, it could also go totally wrong no one knows.
I am definitely one of those who will try to accumulate more.
By the way, do you speak German?
I love languages, i speak 3 fluently, dabble in 2 more... German I understand written. Just because it's the mother tongue of English, but it takes effort.
But like I said... I love languages, if i could speak 20 i would.
There is going to be a lot of debate about your math, so I'm going to avoid that subject.
Your point is well taken, though. Jumping in and out of your positions is not a good strategy. In the world of stocks it is well known that market timing is just a good way to enrich your broker. That is why active stock trading is out of fashion now and everyone uses Index funds to ride the long term market trend with minimal fees.
Once you buy STEEM or any cryptocurrency, you need to stop thinking about how much better off you would have been if you could have bought earlier. If you are in now you are in on the ground floor. Just relax and let the rest of the world catch up.
If you are worried about losing the money that you invested in crypto, then it probably means that you invested too much. Let's face the truth. This is likely the riskiest investment in your portfolio unless you buy things like out-of-the-money stock options.
I was in my twenties when my first stock investments evaporated in the Dot Com bubble. It was a loss of a few thousand bucks and it was a valuable lesson, so I don't mind having paid a Fool Tax back then. That doesn't change the fact that my little investment represented my entire portfolio, it is just that young people can and should take risks.
Almost twenty years later things are different. I've got a lot of money in crypto than I ever did in Dot Coms, but I'm not sweating it. I look at that money as the price of a ticket to ride on the crypto market roller coaster.
A friend bought Bitcoin at $100, sold at $5000, then watched the market peak and come back down close to $5000 again. When I asked him about it he was disappointed that he sold, not because he missed the opportunity to sell at nearly $20,000, but because he missed the thrill of having skin in the game.
The folks who are tempted to jump in and out of the market should probably just reduce their exposure to the cryptomarket until they can sleep well at night without worrying.
This is sage wisdom Professor... very fitting of your handle!
Of course, perhaps Mary lived in Venezuela, or India and just needed some extra cash to help her monthly food bill but the reward wasnt linked to the effort she put in.
It seems to me, the price of Steem is inversely proportional to the number of posts about Steem as desperate 'professional Steemies' ramp up their output.
The best analogy is this......
You start with nothing and invest nothing financially, only your time. Whatever you take out, is profit. The price of Steem is irrelevant.
Oh Nathen... time is the most valuable thing we have. So I disagree on that tiny detail with you.
I guess, I'm trying to tell people, listen... its gonna be Ok, in my own crazy little way.
Lol...perspectives my friend.
Seriously, you write so well and you're very readable :-)
Really great article
It is a wonderful step towards success and progress
Eines Tages werde ich finden, was deine Muttersprache ist.
I'm pretty new here and this is the only entrance way I've taken to get into cryptocurrencies. I don't have much Steem in my wallet and I'm not concerned about trading it in I'm looking to the long term future and at this point I want to increase my Steem Power to get more benefits for my efforts. You said your doing everything you can to increase your Steem Power - What are some of the things a newbie can do to increase their Steem Power?
Contests are great.
@SteemHunt and @actifit has some nice rewards.
Best of luck on your journey!
Thanks for the info!
porters.. checkout http://musing.io
you can make some steem there.
Thanks for the info
Hihi im shocked at the amount of people who says its a bad example hahaha ;)
Well, for me I have come this far not to look back or get fainted at heart. Even the Bible says - “no one lay his hand on a plough and looks back, is fit for the kingdom of God”. Apologies to non Christians here.
If I can ditch my Law internship for steemit, definitely nothing else can MAL that strong will and dedication. Not even Trump Dollar, lol.
Meanwhile, @meno what's APR?
Its the Annual Interest you either pay or in this case you gain.
So when you rent out your SP to minnowbooster requests you are winning a percentage of your Steem Power you delegated, this number/calculation is called APR
Okay, new thing learnt today.
@meno why selling votes instead of curating or at least following curation trails?
Is not vote selling and that kind of stuffs harming this community?
I happen to think it's a great way to counterbalance bidbots. Because the earnings go to tiny accounts selling their votes, thus making distribution a little better (we need this)
and it also does not prevent adults from making the choice of promoting their work. Which they have a right to do.
Ehmmm.... I think people get a little wrapped up in what they "make" and "don't make." And what they "lost."
I used to have this argument with people and BTC last year. "OMG, BTC went from $13K to $11K, I lost ______!"
No you didn't.
You bought BTC at $800. All you currently have is an unrealized gain. And some BTC in which your basis is $800 per token.
Most people on Steemit — unless you actually invested and put "skin in the game" — have a zero basis in their holdings. They paid nothing for them. Zero. Zip. Nada.
As for investing? I'm with you. Investing means you buy and asset and hang onto it in the long run, with an eye towards making a gain. Here in the US, capital gains taxes apply to an asset held for more than a year. Everything else (short term trading) is subject to a much higher tax rate as "current income." All that short term trading? Really not investing, in my opinion, more like gambling or speculating.
Now you speaking my language... I've bought Steem, maybe in total close to 3k of Steem.. close. Compared to other investors its nothing. But im here for the long term. Hence why the red markets don't rob me from the smiles.
If Mary really bought Apple stock she would be supa rich right now lol.
https://steemit.com/news/@ross-early/apple-the-trillion-dollar-company
hahaha funny i would talk about apple today, huh?
haha yup I had a little laugh once I seen that you referenced them
I'm staying. The point of moving to cryptocurrency after all, is to free oneself from fiat money. We would still be dependent on the latter while this indefinite transition is occurring. We need to feed ourselves after all. So, I'd invest a portion (either money or time), that I won't feel bad losing or eventually becoming worthless. It's worth the try!