In this video, we share the 4 mistakes we made in the recent 2020 bull market.

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LESSON #1: TAKE PROFITS

This is more so for those who are investing in individual stocks or crypto and may not apply so much to those who just DCA into indexes. Even though you could’ve taken profits and saved yourself from recent declines, that’s not really the strategy for DCAs.

Now the problem happened for me when the stocks I owned got to insane valuations. On average, stocks should trade at around 20-25 times their yearly profits.

At the peak, companies like Fastly that many of you may know traded at nearly 47 times their revenue - we’re not even talking profits!

In hindsight, it was just way too obvious that these stocks went too high too quickly and a retrace was bound.

Today, Fastly trades at less than 10% of that multiple with a PS ratio of 4
Its not that the company was bad. Growth did slow down a bit but their valuations were just way too high.

Same thing happened for crypto. It went on a massive bull run that was fueled by massive liquidity, lots of speculation, and retail participation.
That kind of increase usually isn’t sustainable and of course, they retraced too.

If I was more disciplined to take profits and not think “what if they went higher”, I would’ve kept a much bigger chunk of my gains.

So don’t be greedy, especially if youre investing in individual stocks, crypto, or individual assets.

If you feel like posting it on social media or telling your family and friends about the gains you’ve made, its probably time to sell.

LESSON #2: AVOID FOMO

There were many times during the bull market that stocks and crypto were just flying.

This is further amplified by social media, where people were posting left, right, and center about this new amazing stock that will change the world.

When seeing people making huge gains on an actual good stock, you kinda want to enter. What if it never retraces? What if this is the last opportunity to buy at these prices?.

Well like I said in most cases especially after a parabolic run up, you will see a decline.

There’s no need to rush into a stock that went up 50% in 1 month, you’ll always get another chance. And if you really liked the company fundamentally, then you’d have no issue buying it cheaper later on.

On the rare occasions that these are really monster stocks that never come back to these levels, just say oh well and move on with life.

There’s a really good saying where I’d much rather be out of the stock and see it moon then in the stock and see it dump.

If you think prices are just way too high and it doesn’t make any sense, just wait it out even if it takes months or even years.

There are of course scenarios where you bypass this rule, but if you’re a beginner investor and haven’t done a ton of research then I recommend against it.

LESSON #3: BEWARE OF UNREALISED GAINS

So this didn't actually happen to me, but I have seen a lot of people who are struggling now because of it.

Basically, their portfolio mooned and they started living life as if they had that money in their bank accounts.

The thing about unrealised gains is that its never really your money until you decide to click sell.

So these people started eating out at fancy places, bought nice cars, and even bought houses that were crazy expensive.

They could sustain it because the bull market was crazy and they could always sell a small portion of their portfolios to pay off the loans.

However when things took a turn their portfolio value quickly dwindled and they realise they’d much rather have cash than a 200k car.

The 20k holiday they took to impress friends? They wished they had that money back now.

LESSON #4: LET OF OF THE PAST

There’s a saying that’s used a lot across the business world by an ice hockey player who said skate where the puck is going, not where it has been.

Basically, we need to be as unloyal as possible when it comes to investing
Who cares if we made a lot of money from a certain stock or crypto, if the time is over its over.

This was evident in many high growth stocks that dominated the 2020 period with huge gains.

From Q1 2021 onwards, these stocks already started going into their own bear markets while the indexes continued marching on.

Hey! Thanks for reading the description. We can't fit everything in here, so make sure to watch the whole video to find out more :)

⌚ Timecodes:

00:00 - 4 Harsh Lessons From The 2020 Bull Market (Avoid These Mistakes)
1:04 - Take profits
3:30 - Avoid FOMO
6:09 - Beware of unrealised gains
7:39 - Let go of the past
10:20 - Final thoughts

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