The One That Got Away
As an advisor, I am by no means immune to behavioural biases. In fact, when it comes to my own money, I’ve probably made far worse decisions when I was younger than most people I’ve met.
This story hurts to tell but here goes.
Back in 2011, I was working at a bank in my first position advising clients. On the side, I spent some time trading highly speculative stocks. I had no aversion to risk. You might even say I looked for risk.
At some point during the year, I was scrolling through my facebook feed and I came across someone from high school mentioning something called Bitcoin. It got me curious, so I looked it up and came across a few articles about it. I also came across a site that allowed me to see the price and even buy some. At the time I would have paid somewhere around $1 USD. I was also able to see the price history and noticed that just a few months earlier it was trading at $0.008 USD. I remember thinking to myself “Well, I guess I missed the boat on this one” and I moved on.
The rest is history. Assuming I would have held all of them until now (highly unlikely), a $500 USD investment would be worth approximately $28,900,000 USD today. Talk about the one that got away.
In this case, my decision not to buy some bitcoin is not the problem. The problem is that I based that decision mainly on the historical price movements. I’m not saying that any sort of analysis would have been possible or would have led me to buy some, but at the very least I should have approached it differently.
Decision-making when investing is no easy task and as humans, we are always dealing with biases that can easily sway us when decision-making. Realizing they exist and they can impact you is the first step in getting past them.