A long time back, I was part of an online group of (supposedly) entrepreneurs and investors. About half the chatter in that group was about crypto but there was zero logic in the discussion.
Some day people would exult when Bitcoin went up. On other days, they would curse some guy for allegedly selling and tanking the market. It was more like cricket commentary, minus the fun.
In fact, these people were not particularly ignorant. The problem was deeper — when something has no intrinsic value, you CAN’T have any sensible argument. What can you say about the likely movement of dogecoin or bitcoin? Nothing.
Whenever you do something in life (including investing), the questions to ask are:
- Is there an underlying logical framework to explain the things I am betting on?
- Can that logical framework predict something (at least with some meaningful accuracy)?
- Is that logical framework consistent with what we already know for sure? E.g., if a framework contradicts an existing proven base of knowledge, we have a problem.
If you are investing (your money, time, or attention) without an underlying logical framework, you are gambling. And if you want to gamble, it is your choice — but be clear about that.
We often accept ideas without underlying basis because some authority figure said something — it could be Elon Musk, Naval Ravikant, Sam Altman, or whoever — it doesn’t matter.
Authority does not make an argument right or wrong, only logic and facts do. And sometimes, when smart people have vested interests, you got to be really careful.
Finally, although I started this post with crypto, I want to end by making a broader point — unless one can explain the fundamentals underlying anything, it is all smoke and mirrors. So if you can’t explain something, don’t do it.
That is not the way to get rich. That is not the way to get smart. That is not the way to build a good life.
PS: This post may provoke crypto-enthusiasts but my goal is not to hurt anyone’s feelings. However, if I can help some people save their hard-earned money, I will be happy.
– Rajan