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Rule 4: Scale Out (Take
Some Profits)
Anyone who has lived through a bubble knows the
value of this.
I have experienced several bubbles, namely London
housing 1984–1988, DotCom in 1998–2000, London
housing again 2002–2008, the Bulgarian property
market (seaside apartments and ski apartments) 2004–
2008.
It’s human nature to be cautious at first and then
progressively relaxed, even reckless. My observations
suggest that it is best to behave in the opposite,
counter-intuitive way: commit yourself to the market
with reckless abandon in the early days, and then start
the scaling out process, applying the brakes and get
the hell out when it appears to be the later stages.
In all those bubbles I made great paper profits that
disappeared in a matter of months. The paper profits
were more than 2 million Euros in the Bulgarian
property market. In none of them did I take profit off
the table in the run-up. Christ did I regret that. I am
taking profit off the table in the cryptoasset market.