How to Stop FUD From Destroying Your Portfolio
If you hate FUD it’s because you’re missing out on the opportunities it brings.
What is FUD
“Fear, uncertainty and doubt (often shortened to FUD) is a disinformation strategy used in sales, marketing, public relations, talk radio, politics, religious organizations, and propaganda. FUD is generally a strategy to influence perception by disseminating negative and dubious or false information and a manifestation of the appeal to fear.
FUD was first used with its common current technology-related meaning by Gene Amdahl in 1975, after he left IBM to found his own company, Amdahl Corp.: “FUD is the fear, uncertainty, and doubt that IBM sales people instill in the minds of potential customers who might be considering Amdahl products.”
FUD is a term very commonly used in cryptocurrency communities due to growing media skepticism towards cryptocurrency markets.
On multiple occasions, examples of completely false information have spread through news outlets causing cryptocurrency markets to drop by hundreds of billions of dollars.
More common examples of FUD include the media using the truth to tell lies, by exaggerating facts and dramatizing scenarios.
Accurate depiction of event — “Some lending institutions disallow purchases of cryptocurrencies using borrowed money”
Manipulation via news is an approach that’s been exploited since Roman times.
Now thanks to social media, newspapers have access to a whole world of free advertising, as long as they can design their articles for maximum reach.
We have come to a point in time where we reward journalists with our attention for misleading us — and newspapers pay them more for it.
“Sensationalism is a type of editorial bias in mass media in which events and topics in news stories and pieces are overhyped to present biased impressions on events, which may cause a manipulation to the truth of a story.”
Sensationalism has three major benefits for journalists.
Firstly, it elicits strong emotional reactions that can manipulate people into changing their beliefs.
Secondly, it catches people’s attention and invokes them to read on.
Thirdly, it fuels social sharing for the following reasons;
- Some people share fear inducing articles to warn others of incoming dangers.
- Others share them in the hopes that someone will give them a different opinion and make them feel better.
Either way, the message of fear gets shared and spreads through word of mouth.
Know sensationalism when you see it, and don’t let it fool you.
Different Types of FUD
There’s 3 types of FUD that have the greatest impacts on cryptocurrency markets.
- Prices Dropping: Ironically, nothing causes cryptocurrency investors to sell their assets faster than the news that their assets have recently decreased in price.
- Institutional Aggression: Unfavorable government regulations and polices enacted by influential companies are usually the leading cause of sell-offs. This triggers a price drop that triggers further and ongoing price drops as the media parrot the bad news throughout their reverberating echo chambers.
- Big Name Skeptics: Prominent figures in the tech space or financial industries can have a marginal impact on the sentiment of the cryptocurrency market. When someone like Jamie Dimon claims that Bitcoin is a “fraud that will ultimately blow up,” some people will believe him and choose to sell his assets.
Protecting Against FUD
Do NOT Share FUD
Since the dawn of the printing press, FUD has relied on emotional individuals gossiping and complaining as it’s medium of transport.
The more fear is induced, the more news is shared and the more fear is induced. It’s a vicious cycle.
We no longer live in a world where information is scarce, in this day and age it’s easy create a balanced outlook by searching for multiple sides to the story.
It’s human nature to overreact to bad news and want to reach out and warn others or search for a comforting point of view through social groups.
Fight the urge to share your anger and fear.
Strip away all assumptions and ask yourself:
- Who does this situation really effect?
- How will it affect them?
- Are they a integral part of the cryptocurrency infrastructure?
- Will they be able to continue their work in the cryptocurrency space despite this event?
Search the internet for a well-measured response to the news, one that fully explains the situation in a logical way without exaggeration, speculation and misinformation.
Or form one yourself.
Share that instead.
FUD-Proof Your Portfolio
There are many investments out there that have long term potential to rise beyond speculative markets. Projects that focus on real users, paying real money for solutions that provide real value.
These are the type of currencies whose long term value is dependent on the performance of its development team, and the completion of its goals, rather than temporary emotional state of its speculators.
In order to FUD-proof your portfolio, here’s 13 questions you should ask yourself about the investments you currently hold:
1. Is there a real world problem that the company is trying to solve?
2. Will their proposed solution drastically improve the way things are currently done?
3. If the company was to solve this problem, would the solution be newsworthy, profitable and useful to society?
4. How will they monetize this currency? Is there enough of a need for the coin or token to fuel increasing demand?
5. Does the company’s roadmap outline a sound strategy towards achieving their goal?
6. Are the milestones listed on their roadmap realistic, and will they be newsworthy?
7. Is the company currently on track with their roadmap, and do they have a good track record of meeting their milestones?
8. Based on their past experience, do the team demonstrate the ability to achieve their roadmap?
9. Is this company the one most likely, amongst its competitors, to succeed at creating a blockchain solution for the problem they’ve identified?
10. Does the company have any pre-existing businesses, apps or products that you can review and, if so, are they any good?
11. Is the currency undervalued? Is the market cap low? Is there room to grow?
12. Are you satisfied that there are no foreseeable changes to society or technology that will alter the need for the company’s proposed solution?
13. Do you believe this project will still exist in 5 years time?
If you cannot answer “yes” to each of these questions then you may want to search for some better investments.
Profiting From FUD
Most trading agencies understand that massive highs and uncomfortable lows are normal in the cryptocurrency world so they plan ahead and have strategies in place to deal with cycles that occur.
When it comes to profiting of hype cycles and FUD cycles, timing is everything.
Keeping A FUD Fund
When it comes to investing, it’s the buying aspect of the transaction that creates your profit, selling just locks it in.
When first entering the market, its advisable to do so in waves, buying when prices hit lows and saving a decent portion of your capital for when a FUD cycle occurs — we call this a FUD Fund.
It’s very easy to get exuberant when investing in cryptocurrencies, especially when you’re seeing your portfolio rise quickly, it makes you want to pour everything you can in — thinking the price will keep rising forever.
It never does.
It is just a matter of time before a wave of FUD comes through and knocks prices back down.
If you have a FUD Fund you will always be in a good position to buy discounted coins when they’re at their lowest.
It’s not greedy to take your deserved profits, in fact it’s smart to plan ahead.
When your coins are in the green and it seems like everything’s going to stay rosy forever.
All it takes is one little wave of bad news.
What will soon follow is a tsunami of over-exaggerated articles about the negative circumstances, the accompanying fall in prices and the imminent end of cryptocurrencies.
Oh the melodrama.
Taking your profits at the highs and topping up your FUD fund will allow you buy back in at the lows and ride the roller coaster back to the top, where you can then take your profits again.
This will also encourage a far more healthy cycle for the cryptocurrency market with investors displaying more caution when the market is overpriced, and more confidence when the market is undervalued.
A wide adoption of this disciplined and unemotional approach to investing will result in a less volatile and healthier market.
Preempting The Panic
If you have your finger on the pulse and you’re in the first wave of people to find the FUD.
Ask yourself, is this news likely to spread?
If it does, is this likely to cause a lot of people to sell?
If the answer is yes, you may be able to preempt the panic by selling first, waiting for the market to dip and buying back your coins at a cheaper price.
This is textbook trading 101. A simple way to increase your bag but also a very easy way to lose it. If the market doesn’t follow your prediction you can easily find yourself buying at a higher price netting you less coins for your trouble.
When first attempting to “preempt the panic”, it’s advisable to do so with a small percentage of your coins, this will allow you to practice reading the market till you gain enough confidence totrade a larger scale.
The more you see FUD as part of the natural order of things, the more power you have to make positive gains out of it.
Many traders rely on FUD to increase their holdings.
In fact, many people believe that’s the main reason FUD exists — for experienced traders to take from inexperienced traders.
It’s quite possible for market makers to sell their coins at a high price. Create a cycle of FUD, then buy back four times their coins at a much lower price.
In the midst of FUD, the absolute worst thing you can do is hold onto your bag waiting for the market to correct, then panic sell halfway through the FUD cycle when your coins are at their lowest.
If you do this, you will find yourself selling at a loss to a more experienced trader, who will then hold your coins as their value goes back up.
If you’re going to panic sell, do it quickly, decisively, before the FUD cycle escalates.
If you’re going to hold, do it steadfastly through the entire FUD cycle.
The only two things worth selling for, is the opportunity to increase the profit on your current positions, or the opportunity to make greater profit on other positions.
The more you understand the market, the more your strategy will evolve.
Good luck out there.