Trendy investment opportunities such as Tesla (NASDAQ:TSLA) shares and Bitcoin may be overlooked by bears and sceptics alike because of their volatility, but when handled with good judgement – and luck – they can also be wildly lucrative. This article is testament to that fact, as it shows how in only eight steps and a little over a year, you could have grown a £3k investment by more than 5000%.
March 2019 to July 2020 and the 8-step formula:
Step One: It’s the 15th of March 2019, you take £3k out of your savings or current account and approach a broker to buy one Bitcoin, currently priced at £2,995 after the alternative currency’s bubble burst in 2018. You then take an early summer holiday you’ll pay for later on, and watch the Bitcoin price recover.
Step Two: Hitting its one-and-a-half-year high on the 9th of August, you sell your Bitcoin for £9,371.
Step Three: You see Tesla’s Q3 profits are set to be announced on the 25th of October, so before then you look for the best time to convert your Bitcoin pounds into dollars. On the 21st, when cable stands at 1.30 – the best rate for the pound-holders since May – you convert your pounds into $12,182.
Step Four: Also on the 21st of October, on what’s ended up being a very busy day, you see some positive predictions for Tesla’s Q3 emerging. You buy as many Tesla shares as you can – 48 – at a price of $12,168 without fees. Go and enjoy a prolonged Christmas break, you’ll earn it later.
Step Five: Looking to offset the cost of Valentine’s Day, you sell all of your 48 Tesla shares on the 19th of February 2020. The shares sell for $917 apiece, yielding $44,016 excluding fees.
Step Six: ‘Black Monday’, ‘Coronavirus Crunch’ and lockdown. March has been costly for all those who didn’t sell off during the Valentine’s sweet period, and the month ended up being a fire sale for fast-handed and shrewd investors. You look back at Tesla, now sitting at $361.22 a share on the 18th of March. Spending everything you can, you bag 121 shares for $43,707, plus change.
Step Seven: Having bought at the stock’s year-to-date nadir, the trajectory of your shares’ value is consistently upward, making several headlines and achieving new milestones each week. Then, prior to what is expected to be a fairly upbeat quarterly results publication, you sell all 121 of your shares on the 20th of July, at the all-time-high price of $1,643 per unit. You make a total of $198,803 excluding costs.
Step Eight: Between the 20th and today (the 27th), you choose the best day to convert your cash back to pounds. Settling for the 24th, at a rate of 1.28, you change your dollars to pounds, leaving you with £156,537. This number could be higher if we’d waited for more favourable interest rates – say, after US-China tensions had de-escalated, and after US equities had had some time to recover from this week’s busy economic calendar.
What does the Bitcoin – Tesla investment formula teach us?
First, that when played right, even volatile and seemingly faddish trading trends can yield huge returns.
Second, that while most people were in a state of panic over coronavirus, the pandemic offered some very attractive opportunities for investment, which I’m sure many took advantage of.
However, there are also lessons we should heed. First, to yield the kind of returns we’ve discussed, you’d have to invest on the right days, supported by the right information. These kind of investment decisions are normally part-luck and part-judgement, and in the case of the latter, are normally done best by those with the contacts and experience necessary to access and identify crucial pieces of information which dictate price movements. This research was done for fun, with the (indulgent) gift of hindsight.
Second, and concurrent with the idea that market shocks offer opportunity, the initial ‘U-shaped’ recovery in June has in some ways inverted during July, and may continue in such a fashion for the near future. Prior to some longer term economic recovery, the next few months could be the opportune time to identify ways of making the best of a bad situation.