In yesterday’s Daily, we shared direct personal insight from PBRG’s founder and publisher, Tom Dyson. He shared his greatest investment lesson.
Today, we delve into Tom’s greatest investment success…
What’s your biggest personal success as an investor?
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From Tom Dyson, publisher, Palm Beach Research Group: My greatest “investment” success was really as a speculator…
I learned about it early. And as soon as I saw it, I knew it was going to be big… I knew it would be sexy to a certain segment of the population.
I’m talking about bitcoin… the famous “cryptocurrency.”
Investing in currencies is like picking the winner in a beauty contest. It’s not about who you like, but about who you think the crowd is going to like. And I knew the crowd would love bitcoin.
I was lucky to find it first… when it was still under $5 per bitcoin.
I put $5,000 in… then another $5,000 a week later… followed by another $15,000.
I learned how to store my bitcoins safely. It took me an entire bank holiday weekend holed up in my apartment with the blinds drawn. (This is an important reason why bitcoin’s price is NOT going to rise much from here… a story for another time.)
It didn’t take long for bitcoin to rocket higher. I started selling when it went over $125. I was almost entirely out by the time it was at $350 per bitcoin. I’d made over $500,000 in 13 months.
I should have held… because bitcoin ended up going over $1,000. Had I kept holding, my position would have been worth $3.5 million.
Mt. Gox—once the world’s biggest bitcoin exchange—filed for bankruptcy in early 2014. I ended up losing $66,000 of my remaining bitcoins. I also lost about $120,000 to the government in taxes.
All said and done, I kept around $350,000 from my bitcoin foray. It was my largest speculative win.
Reeves’ Note: Speculations like Tom’s bitcoin play can give an enormous “bump” to your portfolio… but they’re high-risk. Tom only risked as much as he was willing to lose. If you’re speculating in any market, make sure you allocate only a small portion of your total portfolio (under 5%) to smart speculations. All paid PBRG subscribers can review where safe speculations fit into our 2015 Asset Allocation Guide, right here.