Pippin: It's so quiet.
Gandalf: It's the deep breath before the plunge.
As I write this, there are inklings of an impending event of "potentially" monumental outcome.
It's driven by market forces, and by the singular long expected and highly anticipated "Bitcoin Halving" event to occur roughly on April 22th 2024. This is when the block rewards for mining Bitcoin are cut in half.
For those of you about to tune out because you have no interest in Bitcoin or Crypto - hold onto your hats for a moment.
Though Crypto makes for a good example (as there IS an upcoming event, and many of our readers do have investments there), the experience and situation is universal to life.
Whenever we enter a period of our lives which may present incredible rises, growth, expansion, new experiences and opportunities, we are inherently entering into a naturally more volatile time.
And volatility is one of the most challenging things to understand, process, and handle.
This isn't going to be explicitly about Volatility - we've done that. This is going to be about how to enter into those time periods with consciousness and presence, to have the best frameworks for thinking and decision making as you approach a sea of volatility.
(A little preview - sometimes the volatility is not in the event, but rather in yourself as you navigate it)
In this Crypto example ... many reading this may have experienced the last "bull run," during which Bitcoin saw it's last all time high of $69k.
If you were in the midst of that you may recall how every day and every week felt like a gold rush. Prices kept going up. New projects were launching left and right. Opportunity to *make your riches* was seemingly at your feet every time you looked at a screen.
Intoxicating.
The fall from those heights wrecked many people. The rise into those heights also wrecked many people.
And even if you weren't wrecked, you may have looked back afterward and questioned whether you made decisions well. Whether you should have done something different. You may have been overwhelmed in the midst of the chaos and rise of it all.
That's happened before.
It will happen again.
Whether that experience be in Crypto, or it be in many other aspects of your life. Such as health and fitness, entrepreneurialism, love, etc. We all go through seasons of prosperity ...
So, let's get you prepared for the next one.
In this article you will find a collection of resources designed to help you prepare for the next season of prosperity, to have the tools to weather the volatile waters of that prosperity, and the understanding of how to process what has happened and what you should do next afterward.
Before the Surge
The work you do "Before the Surge" is the groundwork necessary for making decisions well.
We say "making decisions well" rather than "making good decisions," because we intentionally recognize that the outcome of the decision does not determine whether that was a good decision. Rather we are more interested in a process that allows us to make decisions well in alignment with our goals, who we are, and what we want.
We want to make sure that what we say and what we do are in alignment.
Now is a good time to revisit DALA. Directions of Acting Like an Adult is a set of perspectives that make sure what we do aligns with what we said we would do. To act in a way that doesn't align with the way we say we are going to act is the surest way to wreck ourselves (and cause problems for those around us).
These are things you can do regardless of whether you're about to enter a season of prosperity, but if you don't have clarity and alignment of your values and your actions, you're almost certainly going to wreck yourself in the rise.
Now,
In order to make decisions well, we need to understand around what it is we are making decisions.
Our primary framework for this is The Solvable Problem™️. We figure out exactly what it is that we want, we figure out exactly where we are now, and then we "solve" the equation of getting from where we are now to where we want to go.
No one can tell you what the best way is to figure out your Solvable Problem™️ for your life. But there are some common elements to a Solvable Problem™️ which we can give you some guidance toward.
What is your time frame? During the last bull run, and the rise of The Wolf Den and The Guardian Academy, a common point we kept coming back to was the concept of your expected timeline, where a shorter time frame requires much greater risk. Here's a simple example ...
If you want 10 million dollars, and you want it next year, in order to get that, you're going to have to take on an EXTREME level of risk. Like, spend all your money on lottery tickets level of risk. On the other hand, if you're ok getting that 10 million in 10 years (instead of 1) ... you can achieve that with a much lower level of risk. That is doable.
Extending your acceptable time frame for an outcome both increases the likelihood of it happening and decreases the risk (both the risk of it not happening and the risk of ruining yourself trying to make it happen).
BUT
You must remain fully aware of the time frame you have elected. To maintain this perspective on monetary investments for a moment ... if you say you want to make $10 million in 10 years, and you have found an investment vehicle which will get you there with, for the sake of argument, let's say 70% APY - then all you need to do is get about $12k invested and let it sit for 10 years, compounding at 70% APY.
But you must let it sit.
REMEMBER --- That's only if you have that perspective and goal.
If you say "I'm going to let this investment sit for 10 years" and then you start trying to break down that investment after a year because the bull run has given you a 1000% return and you've never seen that amount of money in one place before ...
What you have said and what you are doing are not in alignment. You might not seem to be wrecking yourself by doing that, at least in the moment, but that kind of behavior IS what wrecks you in the long run.
But what if that amount of money could make a huge difference in your life NOW? In that example above, we put in $12k on a 10 year timeline, and it hypothetically gains 1000% in a year during a massive bull run (this is purely fictitious and exaggerated for the sake of example) - $1.2 million could make a huge difference to a lot of people (even minus the taxes you'd fork over).
If you think you'd be in that position ... then maybe your goal shouldn't be 10 million in 10 years. Even if you have that as your long term solvable problem. There might be shorter term Solvable Problems™️ that get you closer to what you want, and which make life better along the way.
That’s one of the reasons The Solvable Problem™️ is not about the number. It’s about the things those numbers represent.
This brings us to another perspective - A waterfall strategy. The waterfall strategy can be summarized like this --- often times in a long term Solvable Problem™️, there are multiple pieces that we want to accomplish (the things which the numbers ultimately get you). One of those might be buying a house, one might be putting your kids through college, one might be buying a car, etc.
Now, you can build your investment into these evenly across the board, where you accomplish all of those things simultaneously at the end. Or, if you waterfall into it, you focus on the most important most immediate item on the list first, and put all of your efforts into accomplishing that (doing so in a way that maintains your long term strategy).
So, if you want $10 million in 10 years, but a lot of your problems would be solved with the first $500k, then maybe adjust your perspective and your planning to waterfall into solving the first few problems.
There is no "right" answer here. What matters is you choose a plan and stick with it.
Simply put on all this - have you defined exactly WHY you are making these investments? Whether that’s money, or investments in yourself? Have you defined what exactly success means with those investments?
Have you made a precise plan for what to do with the investments and the energy at given points? Such as, when you hit $500k (or whatever) you’ll take X amount out, but not a moment before. Or when you hit a plateau in your weight loss, you’ll plan specifically to not change anything, but to gather data and keep your habits.
Again, there is no "right" answer here. What matters is you choose a plan and stick with it.
Recognize you don't have a crystal ball.
It's very easy to know exactly what you "should have" done in hindsight. Most people will have this experience of looking back on what happened, thinking "I should have made those decisions", and then the next time they are in a similar situation they think "ill make those decisions this time."
But you don't have a crystal ball.
This is why we say "make decisions better, don't make better decisions" is because the only way to have made those hindsight decisions in a way that achieved the outcome you ultimately desired - often - is to have had a future telling crystal ball.
In crypto, we might say "I should have sold when Bitcoin was $69k." But you had no way of knowing that was going to be the highest it would get for a long time - and as of writing this, may still be the highest it will ever get. We can't really know. We can only ever make informed decisions based off the data available.
So when you make your plans, when you make your decisions, aggressively audit yourself to make sure you aren't making decisions that would require a crystal ball to know the future for certain.
Ok,
That was a lot about crypto.
What about other areas of life?
Health for example - weight loss, strength gain, flexibility, endurance, whatever. Entrepreneurialism - new business, increasing revenue, growing opportunities, etc. Love - new relationships, marriage, new kids, etc.
We're not dealing with the intense emotional challenge of extreme rising monetary investment value ...
But we certainly, in a season of prosperity, find ourselves going through the same kind of emotional rise and risk because of that.
Say you start a new diet (or perspective on diet and eating), and things start going really well. You're feeling better than you ever have. You're more active than you ever have been. You're strength is noticeably increasing. Your endurance is noticeably increasing.
As an Entrepreneur. Say you enter into a new business arrangement. Success seems to be appearing out of every corner. Growth seems easy. Your messaging is hitting on all points. Everything you do seems to work.
In relationships. You've found the love of your life. You hit it off on all levels. You talk about marriage, kids. Maybe you get married. It's all looking and feeling so good.
And then, things are going SO well, in the moment you change your plan and your behavior. You decide to work more. IF you work more, you can take advantage of all the good things happening and make it happen faster right?
Or, things don't go as you think they will, and even though your progress is good, you falter to despair.
Throughout the surge you're about to experience, volatility may very well be your greatest enemy. And it's not just the Volatility of things going down, but going up as well. The greater amount of variance between your highs and your lows, the more difficult it is to maintain consistency in your actions and your perspectives.
Two perspectives to help.
One is Raise the Floor. It's really hard to manage the high points in any volatile system. We often talk about this in terms of "beating our best" - where your best is by definition the best you have ever done. So it is naturally very very difficult to do better than the best you've ever done.
In systems where you don't control the Volatility, the high points are similarly difficult to manage. But typically this comes down to risk. The more risk you take, the greater chance of high point volatility. The greater chance of high and low variability in general.
So we typically will seek to lower risk. Lowering risk often helps us improve upon our worst, because with lower risk comes higher lows.
The investment related framework is to set things up so that you are asymmetrically benefitted to the upside. That is, you want your losses to be minimal, and your wins to be great. If you can do something that has no risk of loss (or, perhaps more realistically, where the loss would have no impact on you), and any gain is beneficial, then this is infinitely asymmetrically benefitting you to the upside.
Seek to Raise the Floor in everything you do. Your volatility will decrease, and simultaneously the likelihood of getting what you want in the timeframe you want it will increase.
One last perspective
Volatility often only impacts you if you notice it. Following everything we've said thus far - if you manage your perspectives, set a Solvable Problem™️ in place, and go forward with intention, then often times you can intentionally limit your exposure to information because it does you no good.
If you can find enjoyment in being bored, you can arm yourself with one of the greatest long term investment skills of all time. Ignoring what the heck is actually happening. It is often said that the most successful long term investors are those who have forgotten about their investment, and the dead.
You don't need to be dead.
But if you get good at being bored, you can intentionally become one of those people who forgets about their investment.
During the Surge
Now you're in the thick of it.
The bull run is on. You're in the middle of an intoxicating and exciting relationship. You're losing multiple pounds a month and well on track for that swimsuit bod by the summer.
Every day you are exposed to the goodness of it all, is a day you increase your risk of wrecking yourself. Every day you experience a new high exposes you to volatility.
How do you manage?
What do you do when your investments are growing so so fast you feel like you must buy more, or you must sell and recapture some of your investment? What do you do when the things you WANT to do now *don't* fit into the goals you set out at the beginning?
This is the danger you face.
Even if you have everything planned out well in advance. You know your Solvable Problem™️. You have a short term strategy, you have a long term strategy.
First And Foremost ...
Slow Down. If you were on the path before to get what you want, know that you are still on that path. What's likely changed, if anything, is that you feel like you can have it sooner, or you feel like you can have more of it.
The drive to more will always wreck you. More itself has no distinct definition and is therefore not possible to achieve.
The drive to go faster is much the same. You have your plan, your goal, your path set. You are on that path and then you encounter a series of events that makes it look like you'll hit your goal sooner. Maybe you can make that even sooner. Maybe you can add more money and get there more faster.
See? More.
There ARE ways to get there sooner. We talk about that as "Collapsing Time." But in the heat of the moment is not the time to try to collapse time. Collapsing time is an intentional practice and act which is done before all this happens. It is also something that happens as a 2nd or 3rd order effect of other actions you take.
The key to understand in all this is that you can't control the end outcome. Not directly. You can only control your Next Best Step. When it comes to investing, if you have a 10 year time frame (for example), your "Next Best Step" likely involves initial investment, and then doing nothing for a long time (or regular, preplanned, periodic investment).
Changing your next step because shit is going really well right now is the exact action we want to avoid.
Slow Down. Have Restraint. That is the Champion's key word. Restraint.
When you're in the thick of it, you're experiencing higher highs. Big volatility. Pumps of Dopamine. That dopamine rush feeds into the volatility, and it will wreck you.
Embrace the opposite. Be cognizant of and manage your Dopamine closely. Slow down.
The dynamic we're talking about with Crypto is volatility, higher highs, dopamine rushes all due to external forces. That is, big money go up. Fancy ape want more. Gimme gimme gimme.
BUT
There are other volatile forces at work which you can't see. These are important to understand in all scenarios, but often come into play more in realms where the volatile force is less clear and in your face. (Which, remember, you can manage by limiting your exposure to the volatile data)
Miss-matched Expectation
Let's consider a fictitious entrepreneurial scenario. Let's say that we are a freelancer, and we get into a situation where we have a new project that is looking really good.
The initial work in that project is getting great results.
And so we talk about further work. We come to a plan that, at X point in time, or after X situation happens, we're going to really jack up the project. The client is going to invest a lot more into it, and we the freelancer are going to hit a major payday that's going to change everything.
We put our head down and work.
The time comes for that moment ...
And nothing happens.
If you can envision within yourself during that experience, having this building rise of expectation toward an emotional peak. And then when the payoff doesn't happen, we experience this drop of emotion. This failed expectation.
It can feel then like everything is doomed.
Like the work isn't actually going to work out. Like perhaps you should think about doing something else instead.
It's like an inverse experience of the bull market. Instead of wanting to change everything to capture a lot more, we now want to change everything because we fear we're screwed.
Remember the experience of Volatility.
When things start going up, we feel like they are going to go up forever.
If they ever go down, even for a moment, we feel like they are going to go down forever.
And the added tricky layer of this is that often times when it feels like they are going down, they actually aren't. It's just the experience of dropping emotion/dopamine that we get when we build up our own expectation to an outcome that didn't happen.
As a freelancer, one of the tricks I learned for managing this, from Lukas Resheske, is the simple mantra of "it isn't real till it's in the bank." That is, as a freelancer, I am best served by pretending money and a project don't exist until the money shows up in my bank account.
That way, if the project never gets off the ground, if the client changes their mind, if there's some random event that changes everything ... it doesn't matter. I held no expectation. There was no money in the bank, so I had no money to lose.
It's all in this built up internal expectation.
Like you decide reality is the way you expect it to be, even though until it's really actually real, it's all in your mind.
Yet our body doesn't know this.
Our mind has powerful sway over our body. With the right imagination we can trick our body into thinking we're about to be attacked and mauled by a mountain lion ... even if we're just sitting in the comfort of our own home. But our body can end up in that altered state.
When expectation and reality do not match, we put ourselves at risk.
And when you're in the thick of things going really well you are also at high risk of running into mismatched expectation.
In our freelancer example, let's say a milestone wasn't hit as hoped, and the freelancer might feel despair. But all they really have to do is keep working, keep doing what they've been doing, and everything will work out.
(Extend the time frame. Work the next best step. Slow down. Don't make changes in the heat of emotional reaction. Am I repeating myself?)
Weight loss. There's nothing quite like experiencing a weight loss plateau to completely derail your entire physical health progress.
Yet we know that nothing actually happens in a smooth line. Volatility says we must go up and down. It's the rolling average that we're really after.
So when you're experiencing a great habit of fitness. You are lifting 3 times a week, you're eating really well, your losing weight consistently but not too fast, you feel fantastic ... and then suddenly your weight goes up and then stops going down for a time.
What do you do?
Slow down.
Remember your Solvable Problem™️. Keep working your next best step. Don't change what you have been doing.
Detach yourself from the immediate outcome and focus on the process.
After the Surge
When "the surge" is over ... when the season of prosperity has seemed to subside. Now is a good time to reflect.
Let's continue our weight loss example from just a moment ago.
So you started on a new health and fitness journey, you experienced consistent and enjoyable weight loss, you established great lifting habits, you're feeling great ...
Then it all just kinda stops.
BUT
But … you slowed down, you remembered your Solvable Problem™️, you kept focusing on your next best step.
Now you can look at the data.
Now in the calm of just working the process you can examine the data closely.
Maybe you decide you need more data before making a change. Maybe you have enough. Perhaps you learn that something you're doing just doesn't work for you. You might realize that it's not going to get you to your Solvable Problem™️ because you can't maintain it for a long period of time.
That's ok.
Our Solvable Problem™️ is not writ in stone.
We figure it out and do our best to stick with it for periods of time because it serves as our guiding light for making decisions well.
But as we take action, new information is revealed.
Take a moment to figure out what is serving you well, and what isn't. We have a process for this called "Recapture Reallocate":
It is always good and correct to revisit your Solvable Problem™️. Make sure you are still on the path that you ultimately want to be on. Make sure that the way you travel that path is going to be sustainable and get you where you want to go.
Life is not a finite game that you need to win NOW.
It's an infinite game. It's always happening, always going, and the only real way to WIN that game, is to not lose. Don't measure your infinite game against someone else’s. (it's all infinite anyway, what's there to measure?)
Find your joy and happiness in the process of growth, not in the outcome that growth provides.
When you're in that state, you can ride seasons of prosperity like a seasoned sailor upon the currents and waves of the ocean.
Excellent article. Typically when everyone is on the bandwagon to buy certain assets the euphoria has already set in and it is time for investors to gracefully exit and seek another opportunity.The time to enter a BTC position was back in August 2022 when it was trading in the 20K range having already started recovering from the 15K lows. That should not be applied to a small position kept as a reserve in a similar fashion as gold was held in the past.
"What you have said and what you are doing are not in alignment." This is on the Mount Rushmore of success statements.