I think DCA is a Degen Strategy - Better Use The Costanza Rule
*I have been calling this out in the past and I just thought maybe it´s a good time to explain it once more. Especially on a red weekend like this!
DCA-ing is for Dumbo´s, it´s for people not in tune with the market. Good luck getting rich if you put in the same 50 dollars in the same 5 coins each month and probably on the same day.
Because I am pretty confident that if you started doing that these last 6 months or these last 60 months it will work for you.
If you started doing that two years ago, sorry mate that has got to hurt. 2154993 1.png
DCA = LAZY
As I mentioned in the past the DCA strategy is lazy, you do not have to think or keep up. You just throw money in a jar and hope one day that jar will overflow. And know the market principal it will.
Still, if you did it for the last 2 years that´s 24$50= $600 invested. Now there was a year of bull and a year of bear. And I will be nice:
On those 300 dollars, you put in during 2021 by quarter you will have an average loss of 50+%:
Q1 an average loss of 40%
Q2 average loss of 60%
Q3 average loss of 50%,
Q4 average loss of 80%
Q1 average loss of 70%
Q2 average loss of 60%,
Q3 break even
Q4 break even.
So on average, you would have a loss of 60%, so your portfolio is worth about $240 right now (if you bought the best-preserved coins).
Nobody Is Perfect
Now my name may be nobody but even I am not perfect.
I F´ up more than most, but this crypto thing is where I feel comfortable. So as I like to do the opposite I follow the Constanza Rule, sort off.
Yes, that does come from our favorite Seinfeld character George Constanza. The biggest F´up of all, until he stops following the masses, ignores his gut feeling, and does the opposite of what he wants to do.
Once George started ignoring his human emotion and did the opposite of what he felt like doing life started shining on Georgie boy for the first time ever. In finance and crypto, it´s the same.
It´s probably my mentality, but I am following the Constanza rule by nature, which is why I do not get people in the market.
*We all know the meme below:
Now if you think that it´s funny, you probably bought it on the right-hand side and you feel a little stupid.
You are just human, it seems.
Human behavior has led you to follow the masses, to FOMO in as they call it so nicely. And 90% of the people do.
Those are the same 90% that will not be reading this article because the hype has died down and they took their losses and got out of the market. Only to return in 2025 when the narrative changes and the media and their friends light the FOMO inside their human brains once again.
No FOMO Please
I always learned that fear is a Bad Advisor. And a famous rich guy told me to buy when there is blood in the street.
Well right now there is not just blood, the streets are cluttered with body parts oozing blood and it´s getting worse. So why are people not buying?
Fear, my dear Watson.
People are frightened
The media is filling heads with scary stories. And if that isn´t enough, if they were holding on to that last bit of faith that things would get better in 2023.....the FED just took their last bit of hopium.
Yes, we are in the longest crypto bear market ever, but markets move like the ocean. They pull back, they pull back even more, they stabilize, and then another Tsunami hits. If you have been DCA-ing your butt off, that Tsunami will return all your funds with interest.
Because you are rewarded for not doing the human thing, not getting scarred, and not getting out.
But you could have done so much better if you would have been even less like Georgie Boy. If you had followed the Constanza rule you would not have bought at all in 2021´s Q2, Q4, and Q1 & Q2 of 2022.
You would have sold your buys in Q2, bought back in Q3, and sold in Q4 of 2021. And you would not have started buying till Q3 of 2022.
Because you would sell when others were buying, you would wait till others were selling to start buying again. You would do the opposite of the masses and today near the bottom of the bear market you would have been in profit and happily DCA-ing the dip.
Which means that at a certain point you say this is an interesting point to buy and then buy in every 500-dollar drop.
While doing this you should keep swing trading a bit on the side. Because the bear market still offers frequent opportunities to make an additional 20-30% per trade.
As long as the market is not out of this downward trend chances are 90% or more that if one of your coins has a 20% rally it will be followed by a 25% dip.
So just do the Constanza thing and sell when things go up, and put a buy order in 20% below your selling price to buy back when the others are selling.
If you are in tune with the market you will notice when things are really turning around.
Once that happens keep thinking about Georgie boy.
The market is finally going up means people will take profit, too early. And after that initial sale of around 30K people will FOMO in once again and that´s when things get interesting.
That is when I start DCA-ing my sales, every 500 dollars we go above 50K I will start selling little pieces of the stacks I have accumulated during the longest bear market ever.
Fun Fact: I will be selling to the same people that bought at 50K last bull market and I will not ask them why they are back....they can't help themselves they are human just like George.
Thanks for the read!
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