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That is what I said in exasperation to my 20-year-old son.
Some people call me crazy for doing this. But I give my children four years’ worth of college tuition in one lump sum when they are ready to head off to college. It is their responsibility to make that money last until they finish their undergraduate education.
I am proud to say that all of them — with the exception of a couple of silly, low-cost indulgences — have used that money responsibly. My youngest child, however, has taken a “creative” path with his college funds.
Actually, creative is being kind. In fact, I almost fell out of my chair when he told me what he did with roughly one-third of his entire college savings fund.
No, he didn’t buy a new car that he couldn’t afford … lose it at a casino … or spend it on wining-and-dining cute college co-eds.
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What he did was invest roughly a year-and-a-half of his college tuition in Bitcoin. Which is when I cried out, “You did WHAT with your college money?!”
My first thought was, “Great, now that college kids, taxi drivers and grandmas are all buying Bitcoin … the Bitcoin bubble must be close to popping. And my son is going to lose his you-know-what.”
But wait! There is more to my son’s Bitcoin story …
Bitcoin is up more than tenfold so far in 2017. And while he didn’t catch the bottom, he invested in Bitcoin when it was trading at $2,200. This mysterious cryptocurrency has skyrocketed thousands of dollars higher since my son bought in, and he has made more than 500% on his money in less than a year.
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Heck, my son is a more successful — many, many times more successful — investor than I have been this year. Oh, and he is quick to remind me of such.
On paper, he has made enough to buy a nice used car … pay for graduate school tuition … make a down payment on a house … or travel the world for a year after graduation.
But get this: He hasn’t cashed in his Bitcoin profits yet and is letting his gains ride. Bitcoin may crash from here or it may continue to defy gravity and move even higher. Good decision or not, my son is “all in” for Bitcoin.
In many ways, I am quite proud of him. Not so much for investing (speculating is more accurate) in Bitcoin, but for showing an interest in investing at such an early age.
He may very well take after his dear old dad and make a career out of investing. That would make me smile.
At the same time, I am worried to death that all his profits — as well as his tuition money — will disappear in a puff of smoke. My son has so far shown a rare patience to ignore short-term gyrations. But there is a fine line between patience and blind optimism.
And an unintended consequence of his Bitcoin riches is that he quit his excellent part-time job in the University of Montana’s network administration department. Not so he could spend more time partying or playing video games, but because he wants to spend more time studying to get straight-As.
He, like all my children, is an excellent student. But he wants to do his very best to graduate at the top of his class. That makes me extremely proud.
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So all in all, I find myself half-worried, half-pleased … and 100% proud of my son’s first foray into investing. Sure, a profit isn’t a profit until it is booked. And he may yet end up losing a big chunk of his college tuition money. But I’ve always told my children that you learn from what you do … not from what you don’t.
So this nervous dad is going to keep his mouth shut and let his son make his own decisions.
Sure, I’ll give him my opinion if he asks. (SELL! SELL! SELL!) But I think he has learned more about business and personal finance than any professor — or his loudmouth dad — could ever teach him.
How about you? How would you handle the situation if it was your son?
While you’re pondering that question, be sure not to miss today’s big announcement: At 2:00 PM Eastern Time today, Martin will announce precisely when gold, silver, copper, oil, and three other commodities will bottom and WHEN they will explode higher.
A few minutes before 2 PM, click here for his 30-minute emergency briefing.
Best wishes,
Tony Sagami
{ 36 comments }
My advice to your son:
Cash out the original amount invested plus 15% for taxes and then let the rest ride until ready to sell.
Your son has done well. I too am pro Bitcoin. It would be wise for him to take his initial investment off the table and only let the remainder ride.
Suggest that he sell half of his holdings, and buy gold. The preppers are switching from the latter to the former, but may reverse the flow if the futures trading of BTC brings down its price, as may well happen. He may be amenable to a partial sale, more than a complete sale.
I would tell him to sell enough so that he at least can’t lose the original amount he invested. After this big of a run up, count your lucky stars, and just play with other people’s money…..a “play for free” from here on out. Set goals to sell x% at certain intervals.
Simple answer…my recommendation, sell enough to get your principal back and let the rest ride…lets see where it goes!
Dear Tony,
I am a retired cardiologist and a subscriber to your newsletters long before you joined Weiss Research. Toward the end of a 43 year clinical practice I founded a company that did cardiac safety research for the clinical trial industry. My son joined me in that business after becoming a certified architect who became interested in the architecture of computer software. He helped me build a highly successful business that enabled me to retire. Our company was bought out by a publicly traded company and he stayed on and became the President or our division. That company’s stock has skyrocketed in the past 4 years. I am very proud for my boy and I am positive your son too is destined to great things. Next month I will be 80 and I was up till 2 AM last night trying to learn about blockchain and Bitcoin. Who knows, perhaps your son someday will teach us all how to invest our money. I wish him Godspeed. Doc Satin
I would tell my son to cash out his initial investment, and let the rest ride. I’d also suggest that he take small profits as BTC keeps going up, and pay no attention to those that say it could go to zero—it won’t.
I did the same thing with a much smaller amount. And had a sell point on a small percentage of what I had in it. Turned around and skimmed 3 times what I had invested and still have the bulk of it still in cryptos. However as they grow I spread them out in small amounts into good new solid crypto prospects. And I have sell points for those to as they grow.
In something so speculative, reason with him to sell half his position to recoup his initial investment, plus lock in a substantial gain. Let the rest ride into hopeful glory.
I worked with a guy who invested his whole $30,000 on a stock his broker had told him about. He paid around $3/sh. When the share price went up to $12/sh, I told him to sell at least enough to take out his $30,000. He didn’t, the stock continued to climb to $20/sh making my advise look very bad. I was still telling him the same thing and he continued to ignore me, and beleive the stock was going to a $100. When the stock passed $30/sh, I began to doubt myself, but not for long. When the stock hit around $34/sh, it took a sudden
dive back to $25/sh, and I was yelling get out now while you can. He didn’t, but instead road the stock into bankruptcy, loosing not only his nice profit, but his $30,000 nest as well!
I have never forgotten what that did to him, his wife, and his whole life, since his level of
confidence just seemed to vaporize.
Surely u should advise him to sell half on a double
Tony:
Great for your son. However, wouldn’t the prudent advice to him to be to sell enough to protect his original investment, which would be somewhere around 25% of the current value of his bitcoin investment? Leaving the remaining 75% invested will give him plenty of upside, but allow him to play with “house” money so to speak. While he has done well, us more experienced investors have lived though many horror stories where things reverse and all those gains are lost. I suggest you let him benefit from your experience and take some off the table. Just a thought.
Tony,
I would try to convince him to sell enough Bitcoin to recoup his initial investment and perhaps a little more, say 10 or 15 percent. At that point, he would have a “free trade,” meaning that whatever happens to Bitcoin, he has a zero cost basis. If it goes to nothing, he has lost nothing, and if it doubles or triples from here, he won’t notice the small amount that he took out of it.
Best wishes,
Ed Paragi
Tony,
If he was my son I would “advise” him to at least sell enough of his Bitcoin to cover his initial grubstake. That way he’ll still be all in, but if Bitcoin crashes and burns he won’t have to flip burgers to finish his last year at school. Back in 2010, I cashed out my 401K and bought Silver bars at $17.65 dollars an ounce. A year or so later I sold half of it at $49.40, so my cost basis for the rest of it is LESS than zero. Just my 02c worth of course, your mileage may vary.
Tommy
Might be a good idea to sell enough to pay for graduate school.
To eliminate worries, I would advise him to cash out just his original investment (Dad’s money) to continue to use for college expenses. Then whatever is left over, continue to invest that portion in Bitcoin if he so desires.
He should sell enough Bitcoin to replenish the fund you gave him and let the balance run. I bet I’m one of hundreds with that advice!
I’d urge your son to sell enough of his position to recover 125% of his original cost. Lessons: portfolio protection/risk management; diversification; assure funding of his most important goal – college degree that forms basis of his life & career. He could rest easy and focus on studies. If (when) Bitcoin crashes, he will not be distracted from studies by regrets, thoughts of “If only..” or have to scramble to finish paying for college. if all goes well, he’ll still have plenty to fund grad school, etc.
Tony,
Kudos to your son for taking that initiative. At this point he would put everyone in the family at ease if he cashed out his original speculation (as a good speculator would do) and let the rest… aka the house’s money…ride.
Is there no way to put in a stop-loss order or some other way to hedge the gains?
Student loans should be paid the College not to the students as is the current situation. Tony, you gave your kids a direct payment for school tuition ect. That is not the situation for most students. And that is the problem and why student debts are so burdensome for graduates and non-graduates ( more on that latter ). Kids are under the impression that the loans will be forgiven and not to be paid back. They are in for a WORLD OD OF HURT.
Maybe you can convince him to take a portion of the profits off the table so that he doesn’t lose his initial investment, and then let the rest ride.
Having implant surgery this morning. Hope to be
back and on-line when presentation starts. IF not,
how do I go about getting this important info??
Thanks,Richard
i would tell him to take his initial investment out as soon as possible and subscribe to Trade Stops to keep track of when to sell.
Its great to see.
Good luck and well done to him
Regards
I ride motorcycles in the back country and back roads. Added risk. Flew small aircraft. Added risk. Went to war and flew in combat. A whole bunch of added risk. Worked in the Industrial Safety and Health field the majority of my working career. A dichotomy at best.
Point is, one must discover what is that acceptable level of risk for themselves, measure it against ones abilities, experience and willingness to accept the outcome.
If Bitcoin is his motorcycle, ride it, just be aware of the adage “Dress for the ride or dress for the slideâ€.
The big question is how knowledgably is your son on Bitcoin??
Does he know there are now over 600 cyber currencies.
Does he know Bitcoin, like many others are based on a math Blockchain theorem.
Does he know Bitcoin, like the others are backed by “NOTHING”!!
Does he know that 2-money exchangers for crypto currencies have just been HACKED recently and lost many millions of investors money?? See TETHER and NICEHASH.
Does he know that any market that goes up fast also goes down fast. Like Bitcoin losing 30% in a few hours about 2-weeks ago.
Does he know that blockchain accounting data is only updated every 10 minuets at best and can be stopped or interrupted easily which stops all transactions.
Tell your son there is a future for blockchain financial transactions but only when Governments and banks endorse it with regulations otherwise it is only a High-Tech Ponzi Scheme.
I should charge for this info like the Wiess Group does.
I would tell him to drop out of college (it’s a big waste of money) and invest the rest of his college fund in bitcoin. Then he will be able to retire in a couple years instead of graduating with a worthless degree and slaving at a thankless job working for the man.
Tell him to take half his Bitcoin and buy Ethereum instead. Ethereum has more growth potential than Bitcoin right now as the Bitcoin price is moving up so sharply only because of Futures Trading. Ethereum uses “smart contracts” while Bitcoin only allows for trading of the Bitcoin has a slower transaction rate and so is way over-rated.
Have been reading every article you guys put out for the past 3 or 4 years, and am greatly appreciative for the research and work you guys do. I agree entirely with your analysis of the current global markets and it is your very analysis which makes me extremely bullish on bitcoin and the crypto currency space as a whole. If you look at global Bitcoin volumes by country you may find a very interesting correlation between the increase in bitcoin volumes and the countries which you believe are in the most danger of financial crisis. Google it.
If you havn’t taken the time to dive into crypto currencies and figure everything out about the space you are doing yourself a great disservice and greatly endangering your financial future as the new technology that bitcoin pioneered the Distributed Ledger, will change every major industry and market rendering many of the current systems we use today obsolete.
My recommendation is to find a computer scientist or engineer who has the technical knowledge and understanding to explain how this new technology works as it is the bleeding edge of computer science as few people without a computer science .
For your son, if you can’t convince him to take his initial investment out, at least try to convince him to diversify to other crypto currencies to reduce his risk. As the industry develops and more people begin to understand this technology the price of the different crypto currencies will become less and less correlated to one another. Not to mention many of these smaller cap crypto currencies may one day surpass the current market cap of bitcoin, as they actually have purpose and create value.
Sell enough to recoup the initial investment plus enough to repay Dad the cost of the investment as well. Let the rest ride in bitcoin. Lesson learned: Dad is responsible for his opportunity to reap the gains.
What’s your pinoin Mr Tony about atheryom
There is any chance to become next bit
Waiting your answer Mr Tony
Welcome to the Bitcoin millionaire club. I tried to get my three children in two years ago…one daughter tipped toe in this November…other two still “evaluating”.
Congratulations to your son for his initiative. I had a similar experience in the 1960’s with AMF and Brunswick bowling stock when automatic pin setters became the norm. I made some big bucks (big for me) then doubled my “bet” and lost most of it. Understanding downside risk is boring, more complicated than assessing upside opportunities and runs counter to our optimistic nature. Most of us learn to measure risk the hard way.
I find it interesting so many of your subscribers are heavily into bitcoins. Dabbling might be fun, but not with education monies. I’d advise your son to limit speculation with money he can afford to lose. I’d suggest he take most of his gains and reinvest them in precious metals as a downside hedge. Government sponsored currencies will win out in the long run as Central Banks must maintain financial order for nations. Block Chain currencies appear to have a more promising future. Bitcoins appear to me to be a stop gap and highly speculative.
Advise him only to sell if Bitcoin drops below its 200-day moving average; otherwise, hold on!
Bitcoin? Kinda reminds me of Tulips…LOL!
Bitcoin, and other crypto currencies, are examples of extreme market distortions. All crypto currencies fail as money as they are not “a store of value”. Consider that very substantial withdrawals from a crypto following your “investment” today at the current price, will cause your withdrawal price to fall substantially. Therefore not “a store of value”. These currencies are a twist on Ponzi in that gains are dependent to a large extent, but not entirely, on attracting new “investment”. This situation could be different if the “coin mining” (coin value) was tied to the price of hard assets in some manner. But then gains would be very modest in comparison, but realistic.
That said, there is no reason not to attempt to exploit this extreme market distortion. “Invest” an amount you can afford to lose without remorse, and then regularly skim the gains to invest in actual on-going enterprises or assets. Let the bigger fools pay you as long as the scheme continues to the upside.