When Do You Take Profits on Your Bitcoin Investment?

00:01 hey everyone when do you take profits on 00:04 a Bitcoin investment uh the answer is 00:06 you don't bitcoin is the profits you 00:08 take on investments so let me tell you 00:10 what I uh what I mean so I just posted a 00:12 podcast episode uh with Guy Swan of 00:15 Bitcoin Audible and uh it's entitled 00:18 something like uh when do I take profits 00:20 on my Bitcoin or when do I sell my 00:21 Bitcoin or something like that uh most 00:23 of his stuff is too technical uh so I 00:25 don't post the vast majority of his 00:26 episodes and I don't even listen to a 00:28 lot of the his episodes but sometimes 00:29 they're they're good and uh and I posted 00:31 this one so he makes the point which I 00:33 thought was fantastic that he says "Look 00:35 the US dollar is radically up against 00:38 the Venezuelan Bolivar." And so when do 00:41 you take profits by moving back from the 00:43 US dollar into the Bolivar and the 00:45 answer is you don't why would you ever 00:48 move from a strong current you know a 00:50 stronger currency into a weaker weaker 00:52 currency and if you think oh well yeah 00:54 but that's because you know Venezuela's 00:56 uh currency is hyperinflated okay let's 00:58 use the peso let's say you you check and 01:01 you just you know you find out that the 01:03 you know US dollar is up 50% against the 01:05 Mexican peso well does that mean you 01:07 sell your your US dollars to get Mexican 01:10 pesos because you can get 50% more 01:12 Mexican pesos than you could before no 01:15 you wouldn't do that because why would 01:17 you want Mexican pesos instead of US 01:19 dollars uh the short take is you don't 01:21 ever sell a hard currency meaning a uh a 01:25 more scarce currency or a or a more 01:27 credible currency for a less credible 01:30 currency so the same is true with 01:32 Bitcoin you don't sell Bitcoin to get US 01:34 dollars because Bitcoin is the most 01:37 scarce currency uh Bitcoin is the strong 01:40 currency it is the equivalent again of 01:43 saying well you know the US dollar is so 01:45 up against the uh Venezuel Venezuelan 01:48 Bolivar that I'm going to sell US 01:50 dollars to get Venezuelan bolivar 01:51 because I can get a ton of Venezuelan 01:53 Venezuelan Bolivar and the answer is 01:55 yeah or you could just wait because it's 01:57 the Venezuelan Bolivar just like the US 01:59 dollar is just going to keep going down 02:00 as compared to um the Venezuelan Bolivar 02:03 against uh the US dollar or uh even the 02:06 US dollar against Bitcoin so uh it never 02:09 makes sense to move from a strong 02:11 currency into a weak currency unless you 02:14 need to buy something with that weak 02:16 currency and you can't uh afford the 02:18 exchange risk meaning if you absolutely 02:21 positively know you have to buy 02:22 something with US dollars and you won't 02:24 you don't have any ability to get US 02:26 dollars anywhere else and you know you 02:29 have enough Bitcoin to you know convert 02:31 to US dollars to to pay for whatever it 02:33 is like a medical bill well I would say 02:35 finance your medical bill pretty much 02:36 all the hospitals will do that but if 02:38 you can't do that well then yes it does 02:39 make sense to uh to convert but you're 02:41 not profit taking in that situation 02:44 profit taking is something different so 02:45 let me tell you what an example is of 02:48 profit taking so uh back in 2021 at the 02:52 height of the the Bitcoin uh or the 02:55 crypto market in 2021 I made a small 02:57 investment in a company called Exodus uh 02:60 their ticker symbol is EXOD 03:03 and they had a complicated strategy I'm 03:06 not going to go into that ultimately did 03:07 not work out um but now it looks like it 03:10 might work out three and a half four 03:12 years later so four years later it looks 03:14 like their strategy might actually work 03:16 out after all and now it looks like they 03:18 will be listed uh sometime this month on 03:20 the New York Stock Exchange uh and as a 03:22 result of that the shares that I bought 03:24 for $2742 03:27 are now worth like $33 a share now that 03:30 has underperformed Bitcoin to So to be 03:32 clear I should have just bought Bitcoin 03:34 with that exact same money but at that 03:36 point I had enough Bitcoin that I was 03:38 trying to diversify which was a dumb 03:39 idea i should have just bought more 03:41 Bitcoin with that exact same money but I 03:43 didn't so the company's stock has 03:44 underperformed Bitcoin but is now coming 03:47 back because it looks like they actually 03:48 will get listed on the New York Stock 03:50 Exchange okay so I don't know what I'll 03:52 do but I might do some profit taking 03:54 there and by profit taking I mean I 03:57 might decide I'm no longer willing to 03:59 put up with the entrepreneurial risk the 04:02 execution risk the key man risk the 04:04 competitive risk the regulatory risk the 04:07 legal risk there's just a gazillion 04:09 risks that come with a company and I 04:12 might decide that I no longer want to 04:14 deal with that and liquidate the 04:16 investment and move it into Bitcoin so 04:18 but I would you know that is profit 04:20 taking it is deciding that you don't 04:22 want to have an investment that has all 04:24 of those risks and you want to sit in 04:27 the world's hardest currency instead in 04:29 which case I would sell sell that stock 04:31 and I would buy more Bitcoin with it uh 04:34 which I can't do right now because 04:35 they're not publicly traded yet so even 04:36 if I wanted to I can't do that right now 04:39 even if I wanted to because their stock 04:40 has not started trading but after it has 04:42 started trading I will have the ability 04:44 to do that and I may do that i haven't 04:46 decided yet i I need to go see what the 04:48 company's up to i I have a hard time 04:49 selling things I've already bought 04:50 especially if I did a bunch of work to 04:52 decide to buy them in the first place i 04:54 tend to not want to sell them because 04:56 then it's sort of feels like all that 04:57 hard work was for nothing and I did a 04:59 ton of work researching this company 05:00 before I bought its uh small amount of 05:02 its stock back in 2021 but again if I 05:05 did that that would be profit taking it 05:07 would be uh I owned the stock i owned it 05:09 for four years it went up I don't know 05:11 20 30 40% again way worse than Bitcoin 05:14 but still not nothing and I should have 05:16 invested in more that exact same dollars 05:18 in Bitcoin instead uh but here here we 05:20 are and I might do some profit taking 05:22 with that investment to get those funds 05:25 into Bitcoin um out of an investment 05:28 that has a lot of risks that I may not 05:30 want to deal with and into an investment 05:32 that doesn't have all of those well not 05:34 even an investment a currency in the 05:35 case of Bitcoin that is something that 05:38 uh doesn't have all those risks now in 05:40 the short term Bitcoin is also an 05:41 investment because there's so much 05:42 upside to it but it's also a currency 05:44 which means you don't have to deal with 05:46 you know the the risk traditionally 05:47 associated with a company um so anyway 05:50 so that's what that looks like um and so 05:52 again it just makes no sense to sell 05:54 Bitcoin for US dollars now sometimes you 05:57 actually do need to buy stuff so for 05:59 example uh back in uh spring/summer of 06:03 2023 I needed to get another vehicle for 06:06 my family cuz my daughter had turned 16 06:09 and she was ready to drive so at the 06:11 time um I'd made the decision to 06:13 liquidate some Bitcoin to buy that 06:15 vehicle uh Bitcoin at the time was 06:18 trading in the low30,000s 06:21 high 20,000s low30,000s now you may 06:24 think well Joel you're an idiot you 06:26 liquidated Bitcoin at one/ird its 06:28 current cost to buy something it's like 06:30 yeah but I wasn't doing profit taking i 06:32 was not profit taking to get into US 06:34 dollars i was exchanging Bitcoin for a 06:37 car and I needed the car and I don't 06:40 have any debt i have zero debt i uh 06:42 don't owe anyone any money and being 06:45 completely debtree the only alternative 06:47 was to finance the car and then keep the 06:51 money in Bitcoin longer and then pay it 06:53 off over time and I decided I did not 06:56 want to do that because one I'm debtree 06:58 and I've been completely debtree for 07:00 years and I just wanted to stay debtree 07:02 so there's something psychologically 07:04 beneficial about being completely 07:06 debtree and I wanted to stay completely 07:08 debtree um and then secondly I didn't 07:11 have any US dollars to buy more Bitcoin 07:14 because uh or I should say to buy the 07:16 car because I had converted uh the the 07:18 Bitcoin that I was going to would have 07:20 used for that purpose i had converted it 07:23 uh the US dollars into Bitcoin already 07:25 now on the upside a lot of the Bitcoin I 07:27 was using to buy that car I had bought 07:29 in 2022 and very early 2023 so it had 07:33 already appreciated considerably so the 07:35 way I looked at it was I was buying the 07:37 car at a you know 30% discount as 07:40 opposed to the way it looks like in 07:42 retrospect which was that was the most 07:44 expensive Toyota Corolla that humans 07:46 have ever spent money on because the 07:48 exact Bitcoin that I liquidated to buy 07:50 that Toyota Corolla has uh more than 07:53 tripled in value since I bought that 07:55 same Toyota Corolla um that makes it a 07:58 very expensive Toyota Corolla now to be 07:60 fair since then I've also bought a bunch 08:02 more Bitcoin so I mean technically you 08:04 could say well I did liquidate Bitcoin 08:05 to buy that Toyota Corolla but 08:07 ultimately I did come back later and 08:09 decided to buy a lot more Bitcoin than I 08:11 owned even at that time meaning on net I 08:15 still ended up with way more Bitcoin 08:16 after I bought that car than before but 08:18 at the time I made the decision I did 08:20 liquidate the Bitcoin at that time at 08:23 that decision point and then it was only 08:25 later you know weeks later or months 08:26 later that I decided to significantly 08:28 amp up my Bitcoin exposure by converting 08:32 even more US dollars uh to Bitcoin so uh 08:34 but I I do understand you know the 08:36 people who uh spent $100 or sorry a 08:39 hundred Bitcoin to buy an apartment or 08:41 something like that because they wanted 08:43 to be debtree and etc that all makes 08:46 sense they were using the same you know 08:47 the same logic I was which is hey I want 08:49 to be debtree you know Bitcoin is money 08:52 they had massively in a massive 08:54 appreciation on their investment um and 08:57 they decided to convert their currency 08:59 Bitcoin into something they could live 09:01 in and it made sense and just like me 09:03 they were significantly up on the 09:05 Bitcoin they owned and they didn't want 09:07 to take the risk of of having it in 09:10 anything they couldn't live in anymore 09:12 um so I I certainly understand that 09:14 mindset and uh you know that is the 09:16 mindset everyone makes and also I'll say 09:18 as well um Bitcoin looks very not risky 09:21 in retrospect but it used to be way 09:24 riskier than it is now so back in 2015 09:27 when people were buying cars or 09:29 apartments with 100 Bitcoin or whatever 09:31 it is i mean Bitcoin the risk the risk 09:33 that Bitcoin would not become the future 09:36 financial system of the world was way 09:37 higher than that same risk today um same 09:41 back in spring of 2023 when I was buying 09:44 a car with Bitcoin there were no Bitcoin 09:46 ETFs it was not clear that a Bitcoin ETF 09:50 would ever get approved or that Wall 09:51 Street would ever adopt Bitcoin as a 09:53 major uh asset class the way they have 09:56 now so there was all this uncertainty 09:58 and all this risk that just doesn't 10:01 exist today and so part of it is you got 10:03 to teleport yourself back to the that 10:05 same mindset and the same will be true 10:07 in the future for people who use Bitcoin 10:09 to buy things today at some point the 10:11 Bitcoin will be worth 10 times what it 10:13 is today and people will be saying "But 10:15 wait why'd you do that?" And the answer 10:16 is because even though the probability 10:18 that Bitcoin becomes the future monetary 10:20 system of the world is very high it's 10:22 not 100% and so if it's not 100% there 10:26 will be people who decide that they 10:28 don't want to take any risk and as a 10:30 result they are using Bitcoin to buy 10:32 stuff today um because they don't want 10:34 to wait because they want to own 10:35 something or they want to live in a in a 10:37 you know a house that is paid for or 10:39 whatever and even if the probability 10:41 that Bitcoin becomes the future monetary 10:43 system of the world is 99% 10:45 they may decide that they want to have a 10:47 100% chance that they own a house so you 10:50 know that is their prerogative that's 10:51 what money is and even when Bitcoin is 10:54 fully monetized as the future monetary 10:56 system of the world it will still 10:58 continue to go up by 2% to 3% per year 11:00 which is human productivity growth 11:02 that's how much better we get at 11:04 building things and as humans get better 11:07 at building things then the purchasing 11:09 power of a finite money goes up in value 11:11 as well because the finite amount of 11:13 Bitcoin now has the ability to buy 2% to 11:16 3% more stuff every year because that's 11:19 how much better humans get at making 11:21 stuff and you've also got population 11:23 growth built in there as well uh so uh 11:26 anyway that's the highlights uh don't 11:29 ever sell your Bitcoin for a weaker 11:31 currency and because 100% of currencies 11:33 are weaker than Bitcoin don't ever sell 11:36 your Bitcoin to get money for something 11:38 that is going to underperform Bitcoin in 11:40 the long term which is everything which 11:42 means the only thing that it makes sense 11:44 to liquidate Bitcoin for is things that 11:46 improve the life of you or your family 11:48 or in my case I do a lot of charitable 11:50 giving so now and then I'll liquidate 11:52 Bitcoin so I can do charitable giving 11:54 and yes if I held on to that Bitcoin I 11:57 could do you know the the the value of 11:59 it would increase but also the people I 12:01 can benefit and help today um they don't 12:04 want to wait around 10 years for Bitcoin 12:06 to appreciate there are people and needs 12:08 in the world that I can make an impact 12:10 in right now that uh an impact now has a 12:13 compounding effect over the years and I 12:16 want to make that impact right now i 12:18 don't want to just sit on my Bitcoin and 12:20 uh forever and then donate it to uh to 12:24 causes that I care deeply about in the 12:26 future because that means those causes 12:28 are not changing the world today and a 12:31 lot of those causes if they change the 12:33 world positively today it has ripple 12:35 effects that is very high impact meaning 12:38 I would rather give some of those 12:40 organizations money today to change 12:42 something knowing that in 10 years I 12:44 could potentially give them 10 times 12:45 more but the impact they make in the 12:48 world today could potentially be 10 12:50 times more than they could make with the 12:52 same amount of money uh or with 10 times 12:54 as much money 10 years from now uh so 12:57 don't convert a strong currency into a 12:60 weak currency bitcoin is the strongest 13:02 currency so don't convert it into 13:04 anything else not gold not US dollars 13:07 not nothing uh but only use it if you 13:09 you can improve the life of you and your 13:11 family which is exactly what money was 13:13 intended to do all along so have a great 13:15 Sunday afternoon everyone thanks