👀 A billionaire's advice

PLUS: where in the cycle are we?

Author

Alex M.
April 12, 2024

GM everyone. This is 2036.

Let’s be real - it’s been a boring couple of weeks.

Bitcoin’s taking its sweet-ass time to make a new all-time high.

And investors are impatient.

Altcoins are bleeding because people who were looking for quick gains aren’t getting them.

Some retail indicators - like YouTube views and Twitter activity - are in decline 📉

So, where does that leave us?

We’re at the stage now where:

  • it’s boring again

  • weak hands get shaken out before a big move higher

i.e. we’re here:

No one knows how long this boring time will last. As long as Bitcoin doesn’t confirm a big breakout to the upside, everything else is on standby.

People will get restless. That means your altcoins can bleed longer (and lower) than you want them to.

But worry not, my long-term investor friend - Bitcoin is just doing its normal thing:

  • this price action is similar to every previous all-time high

  • at this point in the cycle, it’s usually always followed by a sizable move up 📈

(By the way, charts repeat because they represent patterns of collective human behavior over time. Like clockwork, people alternate between fear and greed—always have and probably always will.)

We’re no longer early, but still very far from ‘dangerous’ (red zone) territory:

So, staring at charts won’t do you much good.

But some good opportunities have popped up in the markets, and you can prepare for the next leg up.

To do that, let’s bring in billionaire Chamath Palihapitiya.

Chamath is the founder of Social Capital, a VC fund with ∼$6 billion in assets under management.

Recently, he had some interesting things to say about investing on the All-In pod…

“The most important thing that fund managers get wrong is not having appropriate reserves for your winners.

The biggest investment dollars I leaked:

was NOT when I didn’t invest enough upfront…

….but when I didn’t have enough funds to buy more of my winners later.

You need to reserve 40-50% of your total fund size for follow-up investments.

If you have $40 billion to invest - take $20 billion off the table immediately. This money is reserved for your future winners.”

Chamath Palihapitiya

Ok, hot shot, so how does this apply to us?

Most of us probably don’t run a $6 billion fund.

But if you invest in ten different altcoins, for example, and five of them go up, you should double down on these five with extra capital.

It’s counterintuitive, but strength begets strength.

It’s not because something has already pumped 10X that it can’t go up another 20-30X.

Don’t fall for the fallacy of ‘it’s already pumped, I’ll go look for something else.’

It’s the idea of adding fuel to an existing fire rather than investing in stacks of wood all over the place, hoping one day a fire will emerge:

The exponential phase-up is coming—and when it arrives, you’ll want to own the rocketships.

The biggest, fattest fires 🔥