The Best Investment I Ever Made
In 2013, I bought a bunch of these things for $125. Today they’re worth $2,000.
At the time, nobody knew what these things were. To buy them, I had to wire money to Slovenia, along with a copy of my driver’s license. I couldn’t even find Slovenia on a map. I apologize to any Slovenians, but I thought it was a joke country.
My wife asked me several times, “Are you sure you know what you’re doing?” The truth is, I didn’t. But I am so glad that I did it anyway.
It was risky. These things had bounced around in value, starting at just pennies, then rocketing up to $70, then dropping back down to $12. At the time I bought them, they were on the rise again, but there was no guarantee they wouldn’t drop in value again to nothing.
The press was full of doomsayers, predicting that’s exactly what would happen. Very smart people wrote very lengthy articles about why these things had no inherent worth, why the bottom would fall out, and why investors would lose all their money.
Over the next year, the value of these things shot up and down like a roller coaster. They’d rocket up by hundreds of dollars, then drop again the next day. It was easy for people to panic. No one really understood them, and besides, very smart economists said they had no real value.
If you had asked an investment professional whether you should buy these things, the answer probably would have been, “Hell, no.” And still, their value continued to climb.
Tyler and Cameron Winklevoss had bought a lot of these things. These were the twins who started Facebook along with Mark Zuckerberg (you might remember them from the movie The Social Network). Their net worth would literally whipsaw up and down depending on the day’s price of these things.
The Winklevii did a Q&A on Reddit, and someone asked them if they were going to sell, since the price of these things had recently dropped. One of the twins responded with an answer that really stuck with me. He said: “Spartans hold.”
I am still not sure what that means. I don’t think the ancient Spartans were big investors, but it conjured up a mental image of the chiseled actors from the movie 300 holding their position, as the entire Persian army descended upon them. No panic. No fear. Just quiet, determined resolve.
The quiet confidence summed up in those two words — Spartans hold — was an encouraging thought for me, and I suspect many others. I held.
The Expert Opinion
I read everything I could find about these things. There was a lot of buzz in the press, since the price was now soaring past the $1,000 mark. Most financial experts said it wouldn’t last, that people should buy safe investments, like index funds and ETFs.
I am fortunate to have a lot of smart friends, and they would tell me why these things couldn’t have any value. “But they do,” I’d respond, showing them the price, which was now over $1,200. They’d tell me why this couldn’t be happening, and their arguments made complete sense. Yet the next day these things would be worth $1,250.
After every price drop, the economists would say, “This is the end.” Then, when the end failed to materialize, they’d say, “Okay, this is really the end.” A few months later: “This is the end, for reals.” It was like living with someone convinced he’ll see the second coming of Christ. “Okay, he’s coming back this Thursday.”
At some point, I just decided the experts were wrong. Anything new is going to encounter resistance from the old order, especially those who have the most to lose. Sometimes people just can’t find room for a new model in their heads.
Today, these things are worth about $2,000. The crazy thing is, we have no idea what they will be worth in a year, five years, or ten years from now. They literally could be worth a billion dollars. They literally could be worth pennies (though I doubt it). But there’s no doubt about one thing: they have value.
Here’s an even bigger bet: today, my company Media Shower is launching a new website devoted to these things. It’s called Bitcoin Market Journal.
Bitcoin, the digital currency that has made headlines for the past several years, is what I bought back in 2013. Where most investors are thrilled with a 10% annual return, the value of bitcoin has increased a jaw-dropping 1600% since then. Here’s a chart comparing possible investments you could have made back in 2013:
I’m not being self-congratulatory, since there were plenty of folks who bought bitcoin at $10, or $1, or even for just pennies. (I’ll let you do the math.)
To me, there’s no doubt that bitcoin has shown its staying power. I’m convinced that whatever the future holds for bitcoin, it has opened up enormous opportunities for all of us who want to invest.
Yet, there’s very little information for investors who want to get into bitcoin, who are not hardcore techies. Where do you buy it? How much does it cost? How do you store it? We’ve written guides to answer those questions, in plain English, not in geek-speak.
I was lucky to be alive during the first dot-com boom, and I never thought I’d be lucky enough to see it again. I feel like we are witnessing the internetization of money, but it’s 1996, and the ride is only beginning.
We’d love your feedback on Bitcoin Market Journal, and we’d love to hear the questions you still need answered. Check out the site, then drop us a line.
And consider buying some bitcoin. Maybe it will be your best investment, too.