Recency Bias: investing in Bitcoin means “getting rich, while feeling frustrated 90% of the time”

00:01 morning everyone let's talk about 00:03 recency bias why it's so hard to hold 00:06 Bitcoin and why holding Bitcoin often 00:08 means uh slowly getting rich while 00:11 feeling frustrated 90% of the time which 00:13 is a quote I love i did not invent it 00:15 it's just a quote quote I heard 00:18 somewhere that I really like okay so 00:20 first of all let's talk about recency 00:22 bias because that's the uh that's a 00:24 fundamental problem with any investing 00:26 which is the human brain always 00:29 remembers when you're investing it 00:30 always remembers if you're holding an 00:33 asset it remembers the highest price 00:36 that it saw recently okay so my brain 00:40 has locked $111,000 in it because 00:42 Bitcoin was 00:44 $111,000 like last week or whatever it 00:46 was so every price under 00:49 $111,000 feels down and it's going to 00:52 feel down for months and months until 00:55 let's say if we drop you know if we drop 00:57 down some and then we start climbing 00:59 climbing climbing then it starts feeling 01:01 like we're up up even if we haven't 01:04 passed you know 111 but the recency bias 01:07 means that you're almost always going to 01:09 remember the highest price you recently 01:11 saw and every price in comparison is 01:14 going to feel low now the problem is 01:16 every time you set a new price one 01:18 second 01:21 here it resets that recency bias so 01:24 let's assume we go up to 01:27 115,000 as soon as we drop from 115 to 01:30 114 113 111 you know 112 whatever all of 01:35 those numbers are going to feel down 01:37 they're all going to feel low even if we 01:38 go to 115 and then we hang around at 112 01:42 for a week or two that entire time we're 01:44 hanging out at 112 feels down why does 01:48 it feel down well because we touched 115 01:51 and your brain it's like one of those uh 01:53 you know whenever you're you're like a 01:55 church switchboard for audio where like 01:57 you see the the you know the uh the 01:60 audio levels go up and down but like 02:02 once they set a new high it like that 02:04 top line sort of stays there at that new 02:07 high even if the audio immediately drops 02:10 until a little while that's the way 02:11 recency bias works which is it's 02:13 constantly getting reset every time you 02:16 hit a new higher high it gets reset and 02:20 that becomes your new recency bias and 02:22 everything else feels down which means 02:23 Bitcoin feels down almost all the time 02:26 because no asset is constantly creeping 02:29 up tiny bits by tiny bits for all the 02:32 reasons I've talked about in numerous 02:34 videos in the past uh the way Bitcoin 02:36 and all other assets work it's not 02:38 unique to Bitcoin is that all assets 02:41 that have high growth potential are 02:43 volatile meaning they go up and down a 02:46 lot on their way up and whether you're 02:49 holding Amazon Apple Tesla 02:52 Nvidia Microsoft Google Facebook any of 02:56 the magnificent seven stocks which are 02:58 the seven highest performing stocks in 03:00 the last decade or so uh all of those if 03:04 you held that stock and you fixated on 03:06 it and you thought about it a lot and 03:08 you checked the price regularly would do 03:10 the exact same thing to you the recency 03:11 bias would result in it constantly 03:13 feeling like it was down now the problem 03:15 is it's the reverse if you're trying to 03:17 buy more Bitcoin if you're trying to buy 03:20 more Bitcoin every price other than 03:23 whatever the most recent low was feels 03:25 high so the most recent low was 74,000 03:29 something a couple months ago uh which 03:32 we dipped down there like for a matter 03:34 of days or hours it was not very long so 03:37 basically almost nobody bought Bitcoin 03:40 less than $80,000 because we were below 03:42 $80,000 for such a short period of time 03:45 but if the numbers a number that's not 03:49 down in the 70s or 03:51 80,000s or 90,000s it just feels it just 03:55 feels like um Hold on one second 03:59 here forgot to program a location so my 04:02 magic Tesla here is 04:05 uh taking me to just it's just randomly 04:09 driving 04:10 forward if you don't give a Tesla 04:12 location it just drives it just drives 04:14 and it just takes turns and it just it 04:17 follows whatever it thinks is an 04:18 intuitive path but it it's has no 04:20 destination to buy so anyway um so if 04:23 you're trying to buy Bitcoin you get the 04:25 reverse problem which is every number 04:26 feels high and so it's constantly 04:29 feeling when you're buying Bitcoin like 04:32 you're buying it for an expensive price 04:35 so I have never bought Bitcoin for a 04:38 price that felt super low i mean maybe 04:41 but it's let's put it this way the 04:43 percent of my Bitcoin that I own that I 04:46 felt like I was buying at a steep steep 04:50 steep discount is a very tiny percent 04:53 because uh every other amount of Bitcoin 04:56 I bought I bought um when the price was 04:59 off the all-time lows which means I was 05:04 buying it even though I could remember a 05:06 number recently that was lower than the 05:07 price I was buying at because again 05:09 you're never going to catch an exact you 05:11 know low spot um so you're you're 05:13 constantly with any investment that you 05:15 have a lot in that's you're constantly 05:17 buying it when you feel like it's you 05:19 know it's it's expensive and then as 05:22 soon as you buy it it feels like it's 05:24 down from the the number that feel that 05:26 felt high and the number that feels high 05:28 is constantly changing because the you 05:31 know the high every time you hit a new 05:32 high it's uh your brain updates so um 05:36 that's why again like I say the famous 05:38 saying in bit in in investing is 05:42 especially Bitcoin specifically I I have 05:44 not heard this about investing in have 05:46 heard this about Bitcoin which is that 05:48 holding Bitcoin involves getting rich 05:50 while feeling frustrated 90% of the time 05:52 and I can tell you in my own personal 05:53 journey uh from the the lowest Bitcoin I 05:56 ever bought which was 6,400 and of 05:58 course even that $6,400 Bitcoin that I 06:01 bought way back in the day which is up 06:03 like 15x the price immed immediately 06:05 dipped after I bought it so even that 06:07 even the cheapest Bitcoin I've ever 06:09 bought felt bad because the price dipped 06:13 into the 4,000s shortly after I bought 06:15 $6,400 Bitcoin so every price I've ever 06:19 paid the price has dipped after I bought 06:21 it making it feel like the price I paid 06:23 was expensive and the vast majority of 06:27 time I've held Bitcoin which is since 06:29 2017 it has felt like it was down from 06:32 all-time highs because any asset only 06:35 hits all-time highs in you know 06:37 infrequently um so even though it's been 06:40 the best performing asset over the last 06:41 10 years uh as compared to anything 06:44 literally anything Bitcoin has 06:45 outperformed every other asset over the 06:47 last 10 years the vast majority of that 06:49 time it has felt like it was down it has 06:52 felt like if you bought it you bought it 06:54 at an expensive price and if you s you 06:57 know if you if you had to sell any for 06:60 any reason to you know fix a repair on 07:03 your house or car or whatever it is then 07:05 it immediately feels like Bitcoin goes 07:07 up right after you sell it so that is 07:10 the nature of investing again because 07:12 your brain that is just the way your 07:14 brain operates now an interesting aside 07:16 is your brain operates the same way with 07:19 it regard to gut reactions so people are 07:22 constantly telling me when they take a 07:23 test uh you know I I got one you know I 07:26 got a question wrong my gut was telling 07:29 me to change it and I didn't and I knew 07:31 I should have changed it and then I got 07:32 it wrong well you remember that one what 07:34 you don't remember is the times that 07:37 your gut told you to change something 07:39 and you didn't change it and you got it 07:40 right so once again everybody remembers 07:44 their gut feelings when their gut 07:46 feeling ended up being right and they 07:49 forget what their gut feeling felt like 07:51 when they when their gut feeling ended 07:53 up being wrong or or so you know they 07:56 only remember it when it was right and 07:57 it was affirmed or it was right and they 07:59 you know didn't change their answer and 08:02 uh as a result everybody feels like they 08:04 have a really good gut feeling the truth 08:06 is in my opinion gut feelings are very 08:09 unpredictable and I you know I don't 08:13 know i just I I think gut feelings are 08:15 overrated because everybody seems to 08:17 have a gut feeling and they all seem to 08:19 be wrong most of the time but people 08:21 only seem to remember when their gut 08:23 feeling was right and then things didn't 08:24 turn turn turn out or or whatever so uh 08:27 it works the same in investing you know 08:29 also in investing everybody remembers 08:32 the things they almost bought but didn't 08:35 when they were right so for example I 08:37 can remember thinking "Wow I remember 08:40 distinctly thinking wow Apple stock is 08:43 on sale." This is like back in 2011 or 08:45 something like that apple stock is 08:46 really on sale it's way down because 08:48 everybody's worried that sort of Apple 08:50 is over i should buy some Apple stock i 08:53 distinctly remember having that feeling 08:55 but I didn't actually do it i didn't 08:56 actually buy the Apple stock back in 08:59 2011 or 2012 or whenever it was that 09:01 Apple was in a big dip i didn't actually 09:03 do it but that's what I remember i 09:05 remember thinking I should have but what 09:07 I don't remember is all the times I 09:10 thought "Ooh I should buy that." And 09:12 then the stock tanked um and I never 09:15 thought about it again because why would 09:18 I have any reason to think i mean my my 09:20 brain does not want to tell me I almost 09:23 made a mistake it was a close call and 09:25 my gut was wrong my brain does not want 09:27 to tell me that my brain wants to tell 09:29 me that my gut feeling is really good 09:31 and that I should have followed my gut 09:33 and if so I would have been right or 09:35 that I did follow my gut and I was right 09:38 um so anyway so the same with uh you 09:40 know the same with investing everybody 09:42 remembers the Bitcoin price the highest 09:44 it's been instead of zooming out and 09:47 thinking okay but let's look at some 09:50 perspective here so holding Bitcoin is 09:52 hard holding Bitcoin has always been 09:54 hard it will never stop being hard 09:57 because by the time Bitcoin is no longer 09:59 volatile it will be fully adopted 10:02 worldwide it's not going to be not 10:04 volatile until it's widely adopted and 10:07 as soon as it's widely adopted you'll 10:10 regret the fact that the vast majority 10:12 of the investment upside is behind you 10:15 um then nobody will complain about 10:16 volatility anymore and the recency bias 10:20 problem will go away and everybody will 10:22 just complain that Bitcoin only goes up 10:24 a few percentage points per year because 10:26 it's universally adopted money which 10:28 means there's no more adoption to drive 10:30 the price higher it only goes higher 10:32 based on human productivity growth which 10:33 is about 3% per year so when Bitcoin is 10:36 the universal worldwide money and the 10:39 price of each Bitcoin is somewhere 10:40 between a million dollars or even north 10:43 of $10 million per coin in that world 10:47 everybody will just complain that you 10:48 know it's not fair that all the people 10:50 who bought Bitcoin earlier you know got 10:53 Bitcoin when it was cheap and it's not 10:55 fair well they can buy it right now 10:57 everybody can buy it right now bitcoin 10:59 is a universally available money that 11:00 anyone in the world can buy right now uh 11:03 but there will be people in the future 11:05 complaining so even even even when 11:08 you're you're all done getting rich by 11:11 by uh being frustrated 90% of the time 11:15 then it's not like you've reached you 11:17 know panacea then you got to deal with 11:19 all the people complaining that it's not 11:21 fair that the people who bought Bitcoin 11:22 early uh you know are in a much better 11:25 financial position then you got to deal 11:27 with all those people telling you you 11:29 got lucky and none of them are going to 11:31 want to hear that it was really hard to 11:33 hold that it was frustrating 90% of the 11:36 time and that you know it constantly 11:39 felt like it was 11:42 down because everybody who didn't buy a 11:46 lot of Bitcoin will all feel like they 11:49 like your experience with buying Bitcoin 11:51 is you just bought it and then you got 11:53 rich and it was so easy and it's not 11:55 fair because not everybody did that um 11:58 and they will have zero appreciation for 12:00 how hard it is to hold Bitcoin over the 12:03 long haul you know consistently hold 12:07 Bitcoin hold Bitcoin hold Bitcoin um so 12:10 anyway holding Bitcoin is hard but it's 12:12 still the in best investment in the 12:14 world i still think it's a great 12:15 investment at $105,000 per coin and if 12:18 you zoom out um you know Bitcoin's only 12:21 been higher than today's price in 10 of 12:24 10 days of its entire 16 years and uh 12:28 anyway so that's pretty amazing so 12:31 anyway um exciting time should be ahead 12:34 uh the Federal Reserve is about to print 12:35 a ton of money if you haven't go watch 12:38 the Jack Morers's uh podcast episode 12:40 that I posted last night uh which should 12:43 hit podcast feeds this morning if it 12:46 hasn't already uh they do the live feed 12:48 on YouTube live and then they reproduce 12:50 it for uh podcast but the um the Fed's 12:54 about to print a ton of money like a ton 12:56 of money and it's going to matter a lot 12:58 how much Bitcoin you own before that 13:00 massive mega money printing happens as 13:03 opposed to after that massive mega money 13:06 printing happens so have a great day 13:08 everyone thanks so much