Most of my life as investor (>20y) I chased underdogs and unknown gems, whether on stock markets or in crypto, AND use leverage. Here are the lessons that I learnt.
1. Markets can be a strong addiction and lead you to antisocial and dishonest behaviours. If too deep into it work performance, empathy will be affected.
2. If you use ever growing leverage without reducing exposure, you end up bankrupt. Because the day you loose is when you have the most to loose.
3. The worst can and will happen. Back in 2003, I purchased at the bottom a consulting firm stock (Altran) with high Beta. That same day when markets scored 10% and stock should have done +30%, Altran announced that day uncovering acct fraud. -30% crash. Hacks, Umami, ...
4. Years later, when Luna crashed, I did not loose much thanks to the lesson that the worst can happen. I was prepared for it (selling regularly, no leverage, diversification, red flags on Anchor yield)
5. Chasing a gem is exciting. Somehow, it is like craving for future big money and the risk is that the desire for money is so strong that it can lure you into reckless behaviours.
6. To pick a gem very early stage is close to gambling. His is why VC, no mater how they try, cannot know perfectly what will happen. would not be too exposed to a single project. Too many things can go wrong. Acknowledge that you know nothing and do not invest too much.
7. Equally exciting is the distressed company that will shine again. Even more romantic approach. But in general it does not work as long as same people / management are involved.
8. Being a contrarian as a permanent system will make you loose in the long run. Buy shit, sell good projects: just cannot work.
9. You can almost never know if: you are just very early on an undervalued project, or just delusional. I think that #Elastos is more valuable than APE. But I may be delusional so I keep low expo to $ELA. I keep I as a real underdog and potential looser, though I think opposite.
10. You may be the only one to think as you do and may be totally wrong.
11. When investing, consider the potential worst case outcome, and do not focus on how much you could make.
12. If you invest too much in a project that for a reason is not worth it after some time, you will never be able to sell at the right time / cut your losses as it will be too painful. Do not overinvest. Same reason: do not use money you could need.
13. You can trade a narrative but you only invest in a project. Example: bring access to crypto to unbanked Africa. Should be worth billions. Project : Bolenum company $BLN. A scam that went to zero due to poor execution and lack of common sense from the founder.
Disclaimer: Bullish on $FSN, $CHNG, $ELA, $CKB, $UMAMI, $GAMMA, $AZERO, $FIL, $ANGLE, $CRV, $CVX, $IOTA, $RDX, $POLYX
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