One of my biggest insights from 2022 was being reminded that your risk tolerance will always be revealed when shit hits the fan.
Case in point…
In November of 2021, my crypto portfolio was up close to a million dollars in profit.
So I was riding on a high…
I felt like a genius because I had a million dollar profit on a $600k investment.
However in 2022 it all came crashing down.
In Janaury the first domino fell and Bitcoin plummeted from $48k down to $35k.
Then it dropped again in May from $35k to $28k.
After that it traded sideways for a bit, and eventually took it’s final plunge from $30k down to $20k (and has since gone lower).
So it was not a good year for crypto…
A lot of people lost a LOT of money (including me).
And on top of that, many other investments are taking a beating as well…
The S&P is down over 18% for the year…
And tech stocks like Netflix and Meta plunged as much as 50-80%.
So there’s blood in the streets.
And while it’s never fun to see a big drop like this…
It was a good reminder for me that you will be tested when things go south.
Cause here’s the truth…
We’ve had nothing but good times for the last 10 years.
The economy has been pumping…
And everything was endlessly going up…
There was no “tough years”.
It was all gravy.
Well, that can’t last forever.
Sooner or later, shit is gonna hit the fan.
And if your whole strategy (whether that’s for your business or for your investments) is based on things always being good, then you’re gonna struggle.
That’s the truth.
You need to be able to handle the bad times.
This is one of the reasons I don’t have more of my money in crypto.
I’m a big believer in it long term…
And think it will be an excellent investment over the next 10-15 years.
However, I’m also aware that it’s volatile.
And if I had 100% of my money in it, I know I wouldn’t be able to sleep at night when it drops like this.
So I play it safe…
And keep crypto to 10-15% of my overall portfolio.
Anyways…
This isn’t really about crypto at all.
It’s about the fact that shit is going to hit the fan at some point.
So you want to be prepared for it.
You don’t want your whole business or your entire investment portfolio being reliant on things always going well.
Cause that ain’t gonna happen.
There’s gonna be good years…
And there’s gonna be down years…
So you want to be prepared for both.
That’s a simple idea…
But it’s one that I think a lot of people were reminded of this year.
So keep that in mind.
– Justin
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