My Greatest Investment Loss Ever & The Lessons I Learned
On January 8, 2018, I invested RM9,000 in a mix of 9 promising cryptocurrencies. You’ve probably never heard of their names, although I admit some sounding pretty cool, like “Stellar Lumens” and “ICX”. (Yes, apparently we still live in an age where putting an “X” in anything is supposed to make it cool.)
Now, almost three years later, that RM9,000 is worth ~ RM 1,046, a loss of 88.38%. It gets worse if you break it down by individual cryptocurrencies, as we’ll see later.
What happened? How did we get here? Why has someone who publicly calls themselves stingy burn money on crazy trades?
This is the story of my biggest investment loss.
Review of the fourth quarter of 2017
In the fourth quarter of 2017, the crypto markets were at an all time high. If you think the hype surrounding crypto today is crazy, you probably don’t realize how crazy it was when Bitcoin hit $ 20,000. But while Bitcoin was (and rightly remained) the king of the cryptocurrency world, there was something even hotter in space.
People called them ICO: Initial Coin Offerings. An innovative way to raise money for startups by giving investors cryptocurrencies (tokens / coins) in exchange for cash. Unlike traditional finance, everything was done 100% online. You didn’t have to walk into a bank or God forbid – even signing one form.
Step into the right room and you could increase your investment tenfold in just a few months. Put enough in the correct ICO and exit correctly, and you could retire.
Never mind the absence of government regulations and other red flags. “F *** the old ways of investing in startups. Too slow, too many rules, and too many greedy consultants sucking up fees. F *** that and f *** the baby boomers. It was the start of a revolution. And I wanted to come in.
In addition, I had just made about 9,000 RM of my own profit from a trading enterprise. I thought, “This is profit money. I can afford to take risks with this.
It was my chance to get rich quick. Only one question remained: in what was I going to invest?
The game is fun, especially if you think you can win
This is not an article on how to value cryptocurrencies. But if I had to give you my critical assessment of the thousands of cryptocurrencies that exist today, I would say:
- A few could change the world. Some would say Bitcoin has already done this.
- 2% could become viable projects.
- Probably> 97% will fail.
- Some are outright scams (Or like Margot Robbie in The big court called subprime mortgage bonds: “Shit.”)
Of course, I know that today, but in the euphoria of December 2017, it was the furthest thing from my mind. All I could think of was the price hike.
I already owned the two most important cryptocurrencies – Bitcoin and Ethereum – which had already given me profits of> 500%.
But I was not satisfied. No, I was looking for even bigger payouts. For this, I needed to buy newer cryptos that had the potential to rise 1000%.
So I dove into research to determine which coins to invest in. And by “research” I don’t mean reading reports from JP Morgan investment analysts. They weren’t even 800 word articles on CNBC. F ***, I was watching “Top 10 Underrated ICOs” YouTube videos and reading “Hottest ICOs of Summer” articles on dodgy websites.
So many pieces, how to choose? I decided I was going to play hobbyist venture capitalist. RM9,000. Invest RM1,000 each in nine rooms. Even if most die, surely there is one that will increase 10x and earn me money, right?
You can probably guess what happened next.
Crypto life changes and losses
I made the investments and I promised myself to be patient. I would give it a few years to reap my profits.
And then life got busy. I started a new job and focused all my energy there. Every once in a while I would check to see if my coins were making money. But aside from a few small spikes in hope, the downtrend was clear. With Bitcoin (“XBT” in the chart below) coming down from its high, all other coins followed – and almost all of them were performing much worse.
Almost three years later, as of September 6, 2020, here’s how our nine coins performed (in US dollars):
- ZRX: -69.95% (Yes, it’s a less sign)
- VET: -73.43%
- OMG: -85.05% (Seriously, even if you don’t like crypto, you have to admit owning an OMG is pretty cool)
- XLM: -88.11%
- ZEC: -91.38%
- MOD: -96.45% (Potentially 100%, as it is no longer actively trading)
- ICX: -96.52%
- NANO: -97.13%
- REQ: -98.29%
Total value: $ 252.06 or RM 1,046.
As the saying goes: the fastest way to get a thousand dollars is to start with nine thousand and buy a bunch of shitcoins.
What were you thinking?
It sounds ridiculous now, but in retrospect, I was actually pretty confident that I would make some money. False.
Logically, I knew most of the pieces were probably going to crash. But knowing something in your mind and believing it’s going to happen is another thing.
Plus, all the hours I spent “researching” the parts convinced me that I knew what I was doing. That my choices would outperform.
Why haven’t I sold? It’s gotten to the point where selling the losers> -95% won’t be worth it. A small part of me also thinks that some parts can recover someday. (To be fair, there are some interesting things going on with ZRX, so I’m giving it some time.) I’m also waiting for another bitcoin price spike – to see if this rising tide will lift my shits up.
I don’t regret anything, but have I learned any lessons? Hell yeah.
Money Burning Lessons
- Trying to get rich quick usually costs you money.
- Prices cannot go up indefinitely. But in the heat of the moment, you can be blinded by greed. You convince yourself to do some crazy shit.
- Don’t underestimate the time cost of tracking investments. It’s easy to monitor an asset. But monitoring 20 can be a full-time job, which most of us don’t have the time for.
- I am not a venture capitalist.
- Realize that you risk losing everything by investing in speculative assets. Only use extra money that you don’t need.
- If you are serious do not lose money, set exit prices and be disciplined to exit.
- Be careful when people are too keen on making money. As the old saying goes: when even your taxi driver talks about it, it’s time to sell.
The silver lining
Last week as I started to write this I was angry. It was painful to see my greatest loss again.
But today, looking back, I can’t help but feel a sense of nostalgia. This feeling of exuberance in the air at the end of 2017; to feel invincible; that our time had come. That we, the agents of decentralization, are going to take control of the world. These are vibrations that I haven’t felt for a long time. It was naive of me at the time – it was way too soon. But it was something special.
The world of cryptocurrency has since moved on from ICOs. Today the hot trend is DeFi, where we are once again starting to hear incredible gains in no time. I listen to my own advice – I didn’t have time to study in depth, so I stayed away.
Meanwhile, Bitcoin and Ethereum continue to walk. Although I have yet to regain their all-time highs, I am more optimistic than ever. All the more so as more and more governments and traditional institutions continue to engage in cryptocurrencies.
If you are interested in crypto, I think starting with a little bit of “experimentation money” in Bitcoin is a good idea. I wrote a detailed article on why here.
And if you have ever lost money investing before, I hope you can overcome the pain as well and use it as a lesson as well. What is the story of your biggest investment loss? Feel free to share in the comments.
Some lessons are expensive, but hey, what’s valuable that isn’t?
Our sincere thanks to