Posted January 11, 2022
By Zach Scheidt
Is There Enough Blood in the Streets Yet?
One of my favorite investment axioms is often attributed to the late financier Nathan Rothschild:
"Buy to the sound of cannons, sell to the sound of trumpets."
Perhaps he got the idea from his father, who supposedly said:
"Buy when there's blood in the streets."
Historians argue about who should get credit for these words. But it's hard to argue with the wisdom behind them.
Today, I want to talk about how these important statements apply to an area of the market you've probably been watching closely.
If you get the timing right on this investment play, it could help you build much more retirement wealth in 2022!
There's Blood in the Streets... But Is It Enough?
The idea behind both Rothschild statements is that when things are bad — no, when things are really bad — that's when you should be buying.
After all, when other investors are panicking, you get the best deal on scooping up the investments they are selling.
The key is to buy after the bloodshed is over so your own blood doesn't get mixed in with the rest of the carnage.
I'm thinking about this statement as I look at crypto markets this year.
Bitcoin — the cryptocurrency that has quickly become the "blue-chip" name in the crypto space — is down roughly 40% off its peak value. And other cryptocurrencies have lost much more than that.
If you consider Bitcoin to be a currency or a storage of value, that kind of drop is devastating. Imagine if your retirement savings dropped by that much in such a short amount of time!
With that kind of drop, there is definitely some blood in the streets.
But is it time to step in and buy?
One concern that I have is that a drop of 40% is really not all that uncommon for Bitcoin (or other cryptocurrencies for that matter).
There is so much uncertainty with blockchain technology and the regulation of crypto and other digital assets. Shifts in investor appetites for these speculative assets are also at play.
And so it's tough to figure out whether this pullback is really a bloodbath we should be buying or a normal correction that could still have further to fall.
So what should you do with your retirement? Is Bitcoin even worth considering?
A Balanced (and Educated) Approach to Crypto
Over the last year, I've been doing a lot of research on Bitcoin and other cryptocurrencies. And the more I've learned about this new area of the market, the more intrigued I've become.
Don't worry, I'm not going to turn into "that guy" who won't stop talking about Bitcoin even when it's clear that everyone in the room wishes he would shut up. We all have at least one of those in our life!
But I am realizing that blockchain technology, cryptocurrencies and other digital assets are becoming a more legitimate part of our current financial market. And there are certainly some opportunities to grow your wealth with these opportunities.
As always, the ability to learn new things is extremely important. And I also think it's important to keep a healthy dose of skepticism as well!
That way your eyes are open to the wealth-building possibilities, but you're not going to be taken advantage of by the "cheerleaders" in this market.
I think it's time to start allocating a small portion of your retirement wealth to cryptocurrencies and other digital assets.
And the current pullback for Bitcoin could give you a great opportunity to dip your toe into this area of the market while learning as much as you can about other digital asset opportunities.
Eventually, as you become more comfortable with the area — and as crypto, blockchain and digital assets become more widely accepted in the financial markets — it will make sense to add to this position.
But the best way to get started is by making a small investment and then purposing to learn everything you can as you walk through the process.
Here's to living a Rich Retirement,
Editor, Rich Retirement Letter