What I Tell People Who Ask If They Should Buy

I get asked this perhaps once a month. The answer has become shorter over time.

The three questions I ask first

“What would you be comfortable losing entirely?”

I ask this before anything else and I do not suggest a number. Whatever I said would become their number, and it would be my number applied to a situation I do not know.

Most people answer with something substantially larger than the amount they would actually be comfortable losing. The follow-up, “and how would you feel the week after that happened”, usually produces a smaller figure.

“Do you have three months of expenses set aside, outside this?”

If not, the answer is that this is not the thing to do next. Being a forced seller is the mechanism by which an ordinary decline becomes a permanent loss, and it is caused by the absence of a buffer rather than by the asset.

This question ends the conversation more often than any other, and it ends it correctly.

“Are you asking because you want exposure, or because you do not want to have missed something?”

The second is not a reason to buy. It is a reason the price feels urgent, and the urgency is manufactured by watching other people.

What I say if all three pass

Buy a small amount of one of the two largest assets, through a regulated venue, using bank transfer rather than a card. Set up a recurring monthly purchase so there are no further decisions. Write down what you paid and when.

That is the whole answer. It takes about a minute to give.

What I explicitly do not do

Suggest an amount. Asked and answered above.

Suggest an asset beyond the largest two. My documented record with smaller assets is nine positions, six substantially down.

Predict anything. My scored record on predictions is indistinguishable from chance.

Set up anything for them. I will sit with them while they do it themselves and I will not touch the keyboard.

The one recommendation I am comfortable making

The venue, because the criteria are objective rather than a matter of judgement: regulated where they live, withdrawals that process reliably, published fee schedule, two-factor authentication beyond SMS.

The exchange I have used since 2021 meets those and so do several others. Saying so commits nobody to a view about an asset, which is why it is the only part of this conversation I will be definite about.

What I say at the end

That I hold a small position, that I find how it works genuinely interesting, and that I would not tell anyone else to do it.

Some people find that unsatisfying. It is the honest position, and the people who come back later with a specific question are always the ones who found it unsatisfying at the time.