Just when you thought it was safe to ignore it, Bitcoin is back. The crypto-currency is off the critical list, which saw its price drop to around $3,500, and is now ploughing towards $5,300 again. Some even reckon it could hit $10,000 this year. Tempted?
I have to say I can feel the old stirrings again. I was briefly sucked into the Bitcoin maelstrom and consider myself lucky to have broken even. I’ve always been a long-term investor rather than a short-term trader, and it was a crazy time, buying stuff like Ethereum and XRP by Ripple without having any idea what it actually did, what it might do in future, or what it was worth.
Remember the wise old saying about only investing in things you can understand? That was the first thing that went out of the window.
It was exciting though, watching the value of my holdings change by thousands of pounds in a matter of days or even hours. I wasted long spells staring at my computer screen watching prices click up or down, sharing the highs and lows with anonymous online crypto obsessives. That’s no way to live your life.
Greed is gone
I doubled my money on Ripple almost overnight, then tripled and quadrupled it, then got greedy and retraced all my gains. So what do I do now? What should you do? Nothing.
Like every other form of gambling, crypto currencies are a mug’s game. Even if Bitcoin does gallop towards $10,000, you may still struggle to profit from it. Like me, you might get greedy and buy more at the top of the market, and you will almost certainly exit your position at the wrong time.
Also, the fantastic early gains were made years ago, when Bitcoin traded at just a few cents. This is no longer a billionaire maker. Another problem is that nobody has found a real practical use for it yet.
I am now the proud owner of 0.8571 Bitcoin, and I will not be adding to my stake. My long-term savings are all in the stock market. That’s what I am relying on to fund a comfortable retirement when I hang up my pen. The FTSE 100 has surged 11% so far this year. I prefer to profit from that.
Stocks and shares are also subject to periodic bouts of frenzied speculation and, in the early days, I used to get sucked into that as well. I would chase hot stock tips and the next big sector, and usually come unstuck, just as I did that the end of the technology boom.
The long game
Now I keep things simple and cheap. I invest regular sums throughout the year, taking advantage of any stock market dips. I like to buy low-cost investment trusts or exchange traded funds (ETFs) with competitive charges, to spread my risk across different markets and sectors.
Then I do, well, nothing. I might check performance once every couple of months, but I don’t sit staring at the screen, lamenting my luck with strangers. Bitcoin can do what it likes. I’m getting on with my life.
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Harvey Jones holds a smudge of Bitcoin and Ethereum but has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.