- Perceptions About HODLing
If you sent a letter to a professional investor 100 years ago asking what "HODL" meant, they would probably assume that HODL was some kind of typographical error. They may have asked you for further clarification, or at the very worst, completely discarded your letter. Now the word HODL seems to be roaming around everywhere especially amongst crypto investors who have been in the market for some time. Before the "HODL", there was probably some other term was used as a more convenient way to convey a common idea between investors. In this post, I will provide my thoughts on what it really means to HODL and how the idea of HODLing has changed over a short span of time.
- The Basic Idea Behind HODLing
So, what is "HODL"? When I first explored the realm of cryptocurrency, I quickly learned that HODL was an acronym for "Hold On For Dear Life". It very well could have been named HOFDL, but HODL is the one that stuck. It refers to the idea that after an individual has placed an investment, they would not touch that investment "for life". This is essentially another view on the idea of never giving up on a certain endeavor. In this case, it would be investing on a certain asset. The trendy asset where the term is frequently applied is cryptocurrency, however, the acronym has spread to other sectors of the investment realm as well.
- When the Acronym Somehow Became a Verb
I was having a light discussion with one of my friends on what was the best way to perceive any kind of new investment. During the conversation, his idea was simple - just keep HODLing any investment. After his suggestion, I asked, "since when did the word HODL become a verb for something"? He replied that while he was unsure of the origin, he could only surmise that HOLD (the verb) and HODL (the acronym) were nearly similar. Holding an asset should have been good enough, but holding on for dear life makes it all the more impactful.
- How the Verb Became a Plan
It's amazing how quickly the investment community adapts to a new trend - and that's great because the market always changes and keeping up to date with the latest information is paramount to making better decisions on investments. It also seems that keeping up to date with investment trends correlates with getting more knoweldge of new meme "terminology" as well! I thought I had the idea well engrained into my vocabulary bank when, all of a sudden, I had to rethink what HODLing really meant.
It all started when I was listening to a conversation between crypto enthusiasts and during the discussion, one of them mentioned that that the best PLAN was to HODL? The group continued to describe the plan, its limitations, and what were the next steps after HODLing. Each person had their own perception on what was the "ultimate" HODLing plan. From this observation, one could assume that the HODL "plan" is subjective based on an investor's previous investment inclinations as well as their sense of the monetary valuation of an asset over time.
- Should I HODL?
Now we reach a classic question with a classic theme - To HODL or not to HODL? It is a good question! My answer is also classic - "It depends". Here is an example. Imagine the scenario where you have completed your investment portfolios. You created one for stocks/ETFs and one for cryptocurrencies. After a certain period of time (e.g. 1 year), the market value of the items on your portfolio would have either increased, decreased, or remained about the same. It is possible to make a critical investment decision at this point. Should you sell a successful asset and take the gains or keep HODLing it in the hopes that it will continue to grow? The mere application of HODLing in this sense shows that HODLing may have its limits. In principle, an investor could literally keep a growing asset forever, but it doesn't always happen that way in real life. New investment opportunities arise or the idea of re-investing dividends may become important during an investor's experience. Therefore, HODLing an asset can be applicable to a certain degree and is subjective to an investors perception of risk, time, and benefit.
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