In any asset class I participate, I have a long list of investments I’d still love to make. It’s not always a literal list, but the aspirations are there. “Could I get to 100 shares of this stock? Or 1 million units of that coin?”
This makes it harder for me to take profits. Whenever I sell something, I’m inclined to just dump the money straight back into the next play. It’s hard on my wallet at times—but as long as I keep choosing decent assets, it’s great for my portfolio.
Many people have the opposite problem. They’re too fixated on the short-term return. They sell as soon as they see a 10%, 20%, 30% gain. There are times for that, of course. But if you cash in every time you make 200 bucks, it’ll be really hard to get to six figures in net worth. What’s more, it trains you to short-shift your gains. How will you ever hold something to a 500% return if your usual exit pole is the 50% mark?
Still, a return is a return, and I get it: You worked hard to make this deal and pull it off successfully. Why wouldn’t you reward yourself with some cash? You can split the money 50:50, of course—but then what do you buy next?
I recently heard an interesting take from a long-term Pokémon investor: “Just convert a small number of old items into a large number of new ones.” Collector’s items and trading cards in particular are their own, special kind of market, but they do have one thing going for them: It’s easy to reinvest because you can do it with discrete units of your collection.
When the Evolving Skies expansion came out, for example, a booster box cost around $100-$120. Let’s say you bought five to keep as an investment. It’s an extreme case, but in the four years since release, the box price has shot up to around $2,000. If you now sold just one of your boxes, you could buy up to ten displays of newer sets, even considering prices have increased across the board. This isn’t to say that those ten boxes will also go up 20x in value—but the chances of them increasing 2x, 5x, 8x over the next few years are higher than the chances of Evolving Skies repeating its meteoric rise.
With physical items, it’s easier to witness the multiplication of your assets. I can see that five boxes are more than one. With stocks, where prices are relative and it’s all just numbers on a screen, it’s much harder to determine: “If I roll my return into a new equity, will that give me more than I’ve had before?”
The nice thing about life is you can learn your lessons wherever they’re available. If trading a single baseball card for a lot of ten of them teaches you what it’s like to grow your portfolio, that will do. And if it takes flipping a car into two smaller ones, so be it. You can then still transfer that learning to your crypto or stock holdings, and apply it there as well.
If you want to grow your wealth, make reinvesting easy. After all, compound interest is the secret sauce—and you don’t get rich by taking profits.
