Paul Mampilly remembers when his friend Tess told him one day that she was rich. This was in 1999, and many people were making large profits off the dotcom stock market. Of course, that was followed by the big crash, and in the end, Tess was left with nothing to show for her investments.
First, however, here is a little introduction on what a bubble really is. The first part of the dotcom bubble is when stocks started rising by nine hundred percent or well over a thousand percent. One stock, Qualcomm, rose over two thousand percent. This all happened pretty quickly. Qualcomm was on Nasdaq, and the other stocks were also on the major indexes. That was the first part of the big bubble. It was when stocks went up by insane numbers.
The same is happening now, just with something called Bitcoin. It is rising by insane amounts, and that is a sign that it is going to crash pretty soon.
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— Paul Mampilly (@Paul_M_Guru) November 9, 2017
During the dotcom bubble, Paul Mampilly sold his stocks early and made a nice profit. That was all fine and dandy, though at the time he thought he may have made the wrong decision, as he saw stocks continuing to rise by up to fifty percent every day. When they started to go down, however, he realized that he had made a wise choice.
He warned Tess to do the same, but she did not listen and refused to talk to him. Suddenly, the stocks went down and she lost all the money that had made her rich.
During the holidays, you may hear about two kinds of stories. One would be from people who made money from Bitcoin. These are the people who bought it when it was very low and sold it as soon as they made a nice profit. Then there are those who bought Bitcoin when it was high and lost money as it started plummeting drastically.
The problem is that nobody is smart enough to get out early when the price peaks. Instead of selling her stocks like Paul did, Tess continued to hold onto them and hoped that they will go up. They never did, and she lost her money. Investors would be smart not to be so greedy and to take a reasonable profit before selling.