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What Are the Best Strategies for ‘Lazy’ Crypto Investors?
How can one be a lazy (efficient) crypto investor? Early in my investing journey I was recommended a book called, “Trading For A Living” by psychiatrist turned trader Dr. Alexander Elder. He states that, with investing, you get “paid to think”. I liked that quote because I liked the incentive to exercise my mind. I was lazy too, and I didn’t want to waste time and energy. I took the lazy path. To optimize my ROI, I would simply optimize my thinking.
I share below the essential investing wisdom that I’ve picked up since then. We will go through fundamental investing principles, how I choose a crypto investment, some alternative strategies, and a note on responsible laziness. The whole point of being a lazy crypto investor is to simplify your life. By refining the ideas I’m about to share, I can claim that my own life has indeed been simplified.
Fundamentals of Lazy Investing
Ponder Bitcoin
If you’re going to invest in crypto, you should have an idea of what cryptocurrencies are. The innovation of Bitcoin is foundational to crypto as we know it.
Therefore, developing your understanding of Bitcoin will help you grasp the industry as a whole. It is key to understand that Bitcoin is an improvement on money, and addresses the failings of the legacy monetary system.
Think Long-term
Cryptocurrency is still in its early stages with a total market cap of USD $2.3 trillion. Still relatively small compared to the existing global GDP of USD $84.5 trillion. If you can HODL for 5-10 years, your crypto may be 5x as valuable as it permeates across industries.
Only Use Extra Cash
Only use money that you can afford to lose. You can save yourself a lot of work growing your money with crypto. But the opposite (losing all/most of your money) can also happen.
Play safe. If you don’t know how to apply leverage, don’t! You can try it, but I’ve come to find that it is not passive for the lazy investor.
Plan the Trade, Trade the Plan
It’s age old wisdom and it still holds true. Be wary of changing your plans on the fly.
It is important to remain open to new opportunities, but you risk losing track of your end goal. Discipline here also prevents losses from making hasty decisions.
Choosing Cryptocurrencies
Stick to Your Expertise
There are more than nine thousand crypto projects, so needless to say, you must have a selection process.
A good start is to focus on your areas of expertise. This saves time spent doing extra research, and taps into your existing motivations. Once again, educate yourself on bitcoin, as this serves as a solid foundation for evaluating all other cryptocurrencies.
Choose the Right Leaders
Only a minority of individuals are victorious in any competition. From sports to ecosystems, there are only ever a handful of dominators.
Companies in competition for market share are no different. Research the track-record of the people leading a project of interest. More often than not, winners keep on winning.
Market Capitalization
Take note of the market capitalization (not the price) of any given project. This acts as a quick risk and potential growth indicator.
The market cap of the overall crypto market serves as your standard of reference. Generally, the larger the market share of the crypto, the lower the risk. Therefore, Bitcoin, as the highest market cap cryptocurrency, is your least risky potential investment.
Alternative Lazy Strategies
Completely Hands-off
There are two completely hands-off tactics. One is to find someone you trust, and let them do all your crypto investing for you. If your contact is good, this could be your highest ROI strategy in terms of energy input.
Another strategy is to load up on a batch of crypto, and literally forget all about it for a few years. In many cases, people would have made much more money if they could keep their hands off their crypto.
Passive Income
Another great strategy is to earn passive income through crypto. There are so many opportunities to do this in the emerging DeFi space.
You can apply most of the principles above to find a passive-income project. With some projects, you can simultaneously earn passive income while your principal investment grows.
Responsible Laziness
It can be easy to get caught in the hype of crypto, so be cautious how you source your information. The internet is a confirmation bias machine; it will feed you what you want to hear. Take the time to think through the information you are collecting.
There is a quote by Einstein that reads, “any person that reads too much and uses their own brain too little will fall into lazy habits of thinking”. He isn’t using the word lazy the same way we are, but you get the idea. Take a moment to process the information you consume. Just because you like a project doesn’t mean it makes sense as an investment.
To test your understanding of an investment consideration, I suggest using the feynman technique. This technique entails taking a subject, and reasoning through it using your own understanding. You can apply the technique by writing down the reasons why you want to invest in a crypto asset. Once on paper, it becomes easier to spot holes in your logic.
A Lazy Algorithm
I propose that you conceptualize the points above as part of a lazy trading algorithm. It’s not perfect, but you can tweak it over time to refine the recipe.
Being lazy doesn’t mean taking thoughtless action. The opposite is true. Effective thinking that leads to the highest reward is the path of a responsible lazy investor. If you develop your lazy algorithm and keep your cognitive biases in check, then you should start to see some lazy profits.
