Tuesday, April 17, 2018

got HODL?

Today is tax day in the U.S., the date upon which Federal income tax returns and payments (if you're in that miserable camp) must be postmarked. I sent mine in last week, electing to skip my usual ritual of making Uncle Scam wait until the very last second to get my money. I guess I've given up on doing that since the Feds won't even hardly notice what I sent in, despite the amount being more than the annual household budget I keep myself on, from my perspective.

I digress. Part of many people's tax returns this time around included gains and losses from trading cryptos. In fact, as I've written about recently, unexpected tax bills on crypto gains taken in 2017 may have prompted round after round of punishing selling as people sold off Bitcoin and other cryptos to raise funds to pay them. Add to that that others may have realized the mistake people were making in assuming that profits from Bitcoin et al. were not taxable, anticipated that they would sell to raise cash, and began selling themselves, either to protect their own profits or to drive down prices so they could buy back in lower later on. Think of it as a reverse short squeeze.

On my tax return, there was zero mention of crypto anything. I avoided all of the headaches, an even larger tax bill, any stress over the possibility that Bitcoin would take off again without me, etc.

Why? Because I HODL.

"...empirically, even in volatile assets like bitcoin, carefully choosing an asset and holding long-term positions has proven to offer the best return.

Warren Buffett, the most successful investor of modern times, has often said that he only invests in what he knows. His preferred holding period: forever. With that model, his company, Berkshire Hathaway, has averaged a 19 percent annual return since 1965 which means it has risen more than 1 million percent.

Theoretical models that assume participants know when markets will move against them can offer better returns but, in practice, market movements cannot be reliably predicted so even when people like Bernie Madoff try to make us think that they've figured it out, they haven't.

Long-term investment in quality assets remains the only reliable investment strategy.

Simply put, HODLing works." -- S. Hopkins
 The rest of the article is an interesting read, but I focused on this part because it echoes something I say often: all of this, everything that's gone on in cryptos up to this point, these are still only the early days. There's really not much to do except find the high quality offerings among all that are out there now, acquire some, and wait. The really big gains are ahead, so why hop in and out of the stuff in the near term for small gains, while also risking badly mistiming the market?

I also really hate paying taxes, so...

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