One bitcoin will cost you $4144 dollars as I type. That’s an all-time record.
How do you feel about that? When you read “all time high”, do you think opportunity… or do you think bubble?
There’s two ways of thinking about this.
One is the “mean reversion” view. According to that way of thinking, all-time highs don’t last. They’re a sign that sentiment is at its most positive. So it’s better to wait for the fall, and buy when prices are cheaper.
That seems like sound logic on the face of it… but things aren’t so simple in practice.
The other way of looking at is the “highs follow highs” view. Steve Sjuggerud is big on this. He says the biggest gains in the markets to be made after an all-time high, because in reality the market tends to make lots of all-time highs, one after another.
Writing in Sjuggerud’s Daily Wealth newsletter, his colleague Brett Eversole puts it like this:
The old saying goes that you need to “buy low and sell high” to make money investing.
But if you take that idea at face value, you’d be a fool to buy stocks when the S&P 500 sits near record highs, right? I mean, how much higher can it really go?
That’s the attitude 99% of investors have… but it’s completely wrong.
Since 1900, the average 12-month gain on U.S. stocks was 5% (not including dividends). However, if you bought stocks when they hit all-time highs and held for 12 months, your average gain was 50% higher… 7.5%.
As you can see, buying at all-time highs and holding for a year or less beats the market. On a one-month time frame, buying at all-time highs nearly doubles the average market performance…
Even though this is true, most investors trade the opposite way…
They think it’s foolish to buy at new highs. They are wrong – based on history at least.
Okay, back to bitcoin. Is it fair to apply the same logic to bitcoin? Are more all-time highs on the way?
Well, let’s put it this way. I came across an interesting article in The Economist today. The headline was “Bitcoin’s record price looks like a bubble”.
It had a convincing-looking chart showing the price of bitcoin going up in a straight line. Surely that can’t be sustainable??
The thing is, the chart showed bitcoin zooming up to $75 a coin. The article was from 2013!
If you’d taken The Economist’s advice back then, you’d have missed a 6,800% return.
In the case of bitcoin, it’s obviously true that highs follow highs. The currency has been making new highs every few months since 2009.
And if you were afraid of new highs, you’d have run for the exits years ago.
Our in-house crypto expert John Duncan has been on this train from the get-go. He’s been trading, mining and researching cryptos for years.
He has a simple list of the five cryptos he’s most excited about today – the five he thinks are most likely to hit all-time highs this year.
Now’s the time. Click here to get your hands on John’s cryptocurrency blueprint.