_edited.png)
Last week we all heard about the Crypto exchange, FTX , claiming bankruptcy due to an 8 billion dollar need for cash to keep the company running. The Crypto marketplace has fallen to around 1 Trillion dollars in value from a high of 3 Trillion dollars and depending on when an investor made their original investment they could have lost almost 67%.
This brings back memories of the Internet bubble bursting in the 2001 timeframe. I was working in New York for Merrill Lynch and it definitely caused a lot of havoc and losses for investors.
The thing to keep in mind is that the internet, as you know is still here, and many companies have been born out of the internet and created amazing businesses.
Twenty years from now, I think that crypto technology known as Block Chain will also still be here and some amazing companies will be created.
The issue is, that it’s really hard to know, Right Now, which companies that will be. For those of you old enough, do you remember AOL? Or Myspace? Or what YaHOO used to be like?
Often times the early, first to market companies, aren’t the ones that exist 20 years later. Technology improves upon itself so quickly. It’s usually the later generation companies that in the end are the true winners with staying power.
Look at Amazon when the internet bubble burst. Amazon dropped 80% that first year and the following year it dropped another 20%. Would you have stayed in Amazon for the next 20 years?
This is what Risk Management is all about and why often times it’s better to buy a Basket of stocks and bonds instead of picking your own.
I have heard a lot of stories about people losing a lot of their retirement money in crypto investments and it’s heart breaking to me. Understanding Risk and the amount of money you should invest is the key to being a successful investor over the long term.
If you or anyone you know wants to learn more about investing for the long term and how to think about risk so you can grow your money in a way that is right for you - then check out my Keys To Investing course HERE
Bye For Now!
Debra
Founder and CEO
Build Your Financial Strength
About the Author
Debra has worked in the financial industry for over 27 years at firms such as Merrill Lynch, Morgan Stanley, Citi Private Bank and Allianz Global Investors. She has worked in different roles such as research, asset allocation and account management. She has an MBA in Finance and the Chartered Financial Analyst designation. Debra created her education business, DebraOhstrom.com to help women get the education they need to become confident investors and be in charge of their financial future.
Debra Ohstrom, CFA
Founder | DebraOhstrom.com
Build Your Financial Strength