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