*This story is adopted from the book The Psychology of Money
Ronald Read: The Wise Patience
Ronald Read, a former janitor and mechanic in Vermont, United States, became the center of public attention after his death in 2014. Despite living a modest life, Read surprisingly left behind an inheritance of $8 million, mostly from his careful stock investments over decades. No one would have guessed that this man who wore simple clothes and lived frugally was a millionaire.
The key to Readâs success in investing lies in his patience and discipline. He does not engage in wild speculation or seek quick profits. Read chooses to invest in strong, stable companies, and he patiently waits for the profits from his investments to grow over the years. His conservative approach to investing reflects a long-term investment philosophy, where he resists the temptation to sell his stocks during market turmoil.
Richard Fuscone: The Overly Ambitious Greedy Man
On the other hand, Richard Fuscone is the opposite example of Ronald Read. Fuscone was once the vice chairman of Merrill Lynch in Latin America, has an MBA from Harvard, and is known as a wealthy and successful figure in the financial world. However, Fuscone's fate was not as fortunate as Ronald Read.
Fuscone lived a lavish lifestyle, with a mansion and luxuries financed by risky loans. When the 2008 financial crisis hit, Fuscone could not bear the burden of his huge debts. He was forced into bankruptcy, losing almost all of his assets, including his mansion which was auctioned off.
Fuscone's over-ambitious, high-risk attitude and overconfidence in using debt to finance his lifestyle demonstrate the importance of being careful in managing wealth. Despite his strong financial background and experience, Fuscone fell into the temptation to live beyond his means.
Lessons from Ronald Read and Richard Fuscone on Investing in Cryptocurrency
In the context of cryptocurrency, the story of Ronald Read and Richard Fuscone provides valuable lessons on how to approach investing.
1. Patience is Key (Like Ronald Read)
Like Read who focuses on long-term investment, cryptocurrency investors should also be patient and not get carried away by extreme daily price fluctuations. Cryptocurrencies are known for their high volatility, so it is important not to panic when prices drop, and to refrain from following baseless speculation or rumors.
2. Avoid Greed and Excessive Ambition (Like Richard Fuscone)
Fuscone is a classic example of a greedy and overly ambitious investor. In cryptocurrency, many people get caught up in greed by trying to make quick profits without understanding the risks involved. This can lead to huge losses, especially if investing with borrowed capital or using high leverage.
3. Diversification and Risk Management
Ronald Read diversified his investments by investing in stable companies, while Fuscone relied too heavily on a lifestyle funded by risky loans. In cryptocurrency, it is important to diversify your portfolio and allocate funds according to your risk tolerance. Never invest more than you are prepared to lose, and be sure to understand the risks of the unregulated cryptocurrency market.
4. Market Knowledge and Understanding
Despite Fusconeâs college education, he failed to manage his wealth because he ignored the basic principles of risk management. On the other hand, Ronald Read, who did not have a college degree, succeeded because of his intuitive understanding of the importance of holding back investments. In the world of cryptocurrency, knowledge is power. Before investing, learn about the project, its technology, and its long-term potential.
Conclusion
The stories of Ronald Read and Richard Fuscone provide important lessons about a prudent approach to investing. In the volatile and speculative world of cryptocurrency, an approach more like Ronald Readâsâpatient, thoughtful, and focused on the long termâcan help avoid costly mistakes like Richard Fusconeâs. Patience and proper risk management are key to long-term success, especially in a market as risky as cryptocurrency.
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