'Bitcoin, gold, silver - why do I only get interested after prices go up?'

Welcome to The Money Coach, a Times of Malta column where readers can ask questions about life's money issues. Send your questions about personal finances, inheritance, gifting or other personal finance topics to moneycoach@timesofmalta.com

Dear Luca,

I believe I am a disciplined long-term investor. I have been doing dollar-cost averaging (investing a regular monthly amount) for the past 15 years, and have had good success, especially in investments in technology and the rest of the American stock market.

And yet, I am worried because I feel that I am missing opportunities that I think, with my investment knowledge and the experience I have gathered over the past years, I should notice.

First, it was Bitcoin. I ignored it completely. Everyone was against it, or at least everyone reputable was against it. And then it rose from around €3,000 to €100,000 in just a few years. I am still kicking myself, asking, “Why the hell did I never accumulate it?”. Now it is at €60,000, a price I swore I would not miss buying when it was in its hundreds, and yet, the crash was so big that here I am second-guessing myself – the fear of missing out has vanished completely!

Then it was metals. Gold, silver and the rest. I ignored them too, seeing them as very slow investments that did nothing. After all, wasn’t it Warren Buffett who said, “Gold is a non-productive asset?”

Recently, metals rose a lot, and while I watched in horror as another chance was missed, now that they've crashed, I am still second-guessing myself. Do I buy now or will they fall further?

If I had diversified more, I would have achieved greater returns.

So, my question to you, Luca, is this. Why do I notice this only when prices are rising? Why do I feel the urge to invest in these only when prices rip up like this? And most importantly, why does all that fervour to buy vanish when the prices crash?

True, it is never too late, especially if you are in it for the long run. But it frustrates me that, as an investor for so long, I am still caught in this trap. I would like to feel different about such opportunities.

Feeling Late

Luca responds: 

Firstly, let me assure you that your strategy sounds sound to me. And while this is not financial advice - get that from your own personal licensed financial advisor - your strategy to dollar cost average fits very well with accumulating at different price levels and then letting money compound over the long run.

Now, regarding your frustration about both Bitcoin and, most recently, metals like gold and silver. What you are experiencing right now is what we call FOMO in the investing world, Fear of Missing Out. This is a very strong emotion, so strong that sometimes investors feel compelled to change their investment strategy immediately and go all in on an asset when its price has gone parabolic.

Such a strategy may bear fruit if it is backed by a long-term plan. Yet if we simply buy an asset at a high price expecting it to keep rising forever, that is rarely the case. Nothing goes vertically up. There are always corrections, pullbacks, and shifts in attention (in fact we saw a correction in metals this week). Some assets move into the spotlight while others fade, depending on many factors, including geopolitics and the global economy's reaction to international events.

You also pointed out that your fervour to invest disappears when prices go down fast. Let me remind you that our job is not to time the market perfectly, but to spend as much time in the market as possible. This is exactly what you did with technology and the American stock market. Doing the same, but in a more diversified way, could help you capture a slice of these other market moves as well.

There may be years where you see little to no results. Take silver as an example. If you invested a lump sum back in 2011, when it was at its historical peak, you’d have had to wait until 2025 to see any returns on your investment. From 2011 to 2024, it made little progress. The same can be said for gold. But imagine if you had accumulated these metals consistently during those years. You would now be sitting on compounded returns of around 100-200 per cent.

Markets also tend to move in cycles. The job of the long-term investor is not to try to catch a cycle early, but to be in it and make the most of it when it eventually rises.

I hope this helps.

Luca is the founder of the Money Coaching Hub. Email him your financial questions or your response to today's question for a chance to be featured in a future column.

Disclaimer: This column is intended to provide general information on various topics related to personal finance. The information provided is for educational purposes only and should not be construed as personalised financial advice for your specific situation. Financial decisions are highly individual and can vary greatly based on your unique circumstances, goals, and risk tolerance. The author of this column is not authorised to provide financial advice. Before making any financial decisions, it is recommended to seek professional financial advice from an authorised financial advisor.