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The Rule of 101: Crypto Trading Lessons taught to me by my Grandmother

The Rule of 101: Crypto Trading Lessons taught to me by my Grandmother

Could you use some common-sense trading lessons that have stayed the test of time? Let me tell you about my Bubba.

That’s what I called my paternal grandmother, Irene. Bubba was a force of nature. She was the only member of her family who could find work during the Depression. Apparently she was quite the looker and knew how to use her charms to her advantage.

She worked, supporting her entire family while still a teenager, as the attractive secretary fronting a Wall Street “bucket shop”.


    Bubba and the bucket shop


    A bucket shop was a scam in which people sold shares in things that did not actually exist. A silver mine in Argentina. A mutual fund that was neither mutual nor a fund. That sort of thing. Prior to the internet era, it was difficult to confirm the legitimacy of such proposals, and a smooth-talking con man could make a fortune, handing out fake securities papers in exchange for cash, before disappearing into the night, ready to cook up a new scheme.

    Bubba didn’t know exactly what her two bosses in the back room were doing, but she knew it wasn’t on the up and up. She was clued in by the fact that, on more than one occasion, cops would raid the office. When they arrived, she had to press an alarm button, so her bosses could hightail it out a back door. She then would remove vast wads of cash from hidden compartments, strap them to her girdle, and exit the premises.

    While Bubba was doing this to keep her family with a roof over their heads, she did not approve of the behavior. She also didn’t feel like she had a choice. During the Depression, work was work. Her bosses, however crooked, were also clever. Not only because they got away with this scheme for years and never, as far as she knew, went to jail for it. Also because they invested their hard-scammed earnings into proper investments on the stock market.


    Bubba the stock market player


    The con artists also taught Bubba how to invest. They showed her what to look for in a company, what questions to ask and, perhaps most importantly, how not to be swindled by people like them. Bubba became a teenaged investment whiz. The only problem was that, at the time, she was barely making ends meet for her family. She knew how to invest but had no extra funds with which to do so.

    Fast-forward a decade and my Bubba married my Grandpa. Grandpa Dick was a gastroenterologist with a private practice in Brooklyn. He was modestly well-known, as he helped to develop the first flexible gastroscope, which could be inserted down the throat and into the stomach, to examine patients and take biopsies. (He was also the private physician to US General Mark Clark, who famously wore a pair of ivory-handed revolvers, cowboy-style, during the Second World War). Grandpa Dick made a solid living as a doctor. He was never rich, but he had money to invest. Bubba invested it.

    Bubba wound up choosing an astounding array of excellent stocks. We’re talking Disney, Coca-Cola, Microsoft, Apple...when they first came on the market. In her 80s, she was invited to appear on some investment programs on MSNBC and CNN, because she was this cute little old lady with a rock star portfolio. (She was flattered but politely declined). When I would visit her as a child, I enjoyed sitting on her lap and reading the stock market. She would tell me the stocks and I would find their value--she needed either a grandson or a magnifying glass to read the small print. This was my brief introduction to investing.


    Bubba and the rule of 100


    The main rule that I remember is that she would almost always buy exactly 100 shares of a stock. This was a safe, modest investment. It was all she could afford, at the start, but it also seemed like a good way to hedge her bets. Since her stock choices did well, she did well, but never flying-to-Vegas-in-a-private-jet well, since the number of shares was always modest.

    Now that I work in the cryptosphere, I’ve gleaned two lessons from Bubba’s story that I think will resonate with the crypto traders of today.

    First, the blockchain means that we no longer have to fear “bucket shop” shenanigans. The transparency and immutability of the blockchain means that we potential investors can check on currencies and assure ourselves of their bona fides. The internet helps with this, for while it is full of falsehoods, it is also good at spotting falsehoods. The bucket shop scheme would be very difficult to pull off today, or rather it would require some willful ignorance or negligence in due diligence for someone to fall for the equivalent, which I’m told is the “pump and dump” scheme.

    The second lesson is Bubba’s Rule of 100. I’m beginning my crypto investment journey, as Bubba did, with modest disposable income. Unlike Bubba, I don’t feel that I know enough about various assets to have a strong sense of what to buy. I know that Bitcoin is the safest investment of the bunch, but it’s already so “pricey” that I could only afford a fraction of a single coin. That’s somehow less satisfying.


    Be like Bubba: Do your own research

    Now, I’m hedging my bets, like Bubba. I’m listening to people who I consider smart and trustworthy and more immersed in crypto news than I. And when I hear the name of a currency, I do a bit of research. Just a bit. My techno-ignorance is such that I wind up very quickly not understanding the descriptions of assets. But I’ve honed in on one thing: I have far greater confidence in assets that do something other than simply being a tradable coin, rather than currencies that are nothing but tradable. This means that Dogecoin and Shiba Inu don’t feel like a good long-term investment to me (though they both may be a good short-term investment, thanks to the hype surrounding them).

    Instead, I see the functionality of blockchain technology as making lives easier and look for assets that are tradable coins, yes, but that also do something helpful. For example, Theta is an asset that also fuels a system in which users can lend the internet speed and computing power of their computers when they aren’t using them, or borrow the speed and power from others when they’d like to stream a movie or play a video game seamlessly. That, to me, seems practical and useful. Ethereum and Algorand are great for smart contracts. Again, this is pragmatic and solves a problem, therefore I have confidence that their coins will have enduring relevance, assuming that some other project doesn’t do the same thing better than they do.

    I’m also, admittedly, drawn to altcoins that have a very low price per coin. I feel better buying 100 of something, even for cheap, than buying, say, .03 BTC. This is my brain playing tricks on me, perhaps, because deep down I have most confidence that Bitcoin will retain or gain in value.

    So my approach has been to identify assets that do something useful and that people I respect recommend, and then buy either 100 coins or $100 worth of coins (if the coin is currently of very low value). Each time I do so, I think fondly of Bubba. She would’ve been a crypto ace, I’m sure.

    This content is for informational purposes only and is not investment advice. You should consult a qualified licensed advisor before engaging in any transaction.

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