Foresight ran a commentary making a blunt point: if you make money on an investment you do not actually understand, that profit should mostly be treated as luck, not as some method you can just repeat.
The piece said the author was thinking about a chat with a friend over the weekend after finishing an earlier article. In his telling, that exchange basically carried the previous discussion forward.
According to the article, the friend messaged on Sunday and said he had spotted the token SHROOM last Thursday or Friday and bought it immediately. He did not put in much money. Later, after the token went up 6x to 7x, he sold because he really could not make sense of it.
The author said he also watched SHROOM but did not buy
The author said he had noticed SHROOM last Friday too, but stayed out. Under the framework he uses now, he wrote, he had no way to judge whether the project’s model could keep working over time, so he passed.
His view was that SHROOM’s momentum is coming mainly from one thing: under the current trend, it can keep pulling in liquidity. That then props up both its total value locked, or TVL, and its market capitalization.
The article went on to say this setup is nothing new. The author said similar structures had already appeared in other DeFi projects, yet those earlier projects failed to keep their momentum and most of them eventually stalled out. So, from design alone, he said, it is hard to tell whether this mechanism can last.
Why the author remains doubtful about sustainability
The piece said SHROOM’s mechanism is working again now mostly because it is catching the current wave of stock-like token trading. But the author argued that this does not amount to much of a moat, since other projects can copy it too.
He wrote that the project still has not carved out a stable niche in the ecosystem. If another project layers on some marketing or some incremental innovation, it could still catch up and overtake it. Put together, the author said, that is why he remains skeptical about SHROOM’s long-term sustainability.
At the same time, he added a caveat. If he understands the project better later, or if he becomes convinced the model can hold up, and if the price is still within a range he can accept, then he would still see it as fine to enter even if the upside at that point is no longer as large as it is now.
Small trial positions do not solve the problem
The article also pointed back to the author’s Aug. 19 piece, “Two Buffett Quotes That Explain the Essence of Investing,” which said: “The way to keep risk under control is to use only a very small amount of money to try it. That way, even if you lose, it will not do serious damage, ... but if you make money, forget 100%—even if you make 10 times your money, because the principal is so small, the meaning is still quite limited.” The article summed that up as using only a tiny amount of capital to test an opportunity, so losses stay manageable, while even huge percentage gains matter less because the starting principal is small.
It also cited another article from July 17, “Heavy Positions for Certainty, Light Positions for Imagination | Q&A,” where the author wrote: “If you invest 5%, that is really just dabbling, trying something new, a tentative position, ... and a dabbling-style allocation is very hard to turn into a major leap in wealth.” The point, the article said, was that a 5% allocation is still exploratory, and this kind of position is unlikely to create a big jump in wealth.
The commentary said those two earlier arguments both run into the same unsolved problem. For an ordinary investor, when the asset is not well understood, the sensible move is to keep the position small and treat it as an experiment. If someone puts a large amount of money into that kind of trade, the author said, it stops looking like an experiment. It starts looking like gambling.
But here is the catch. Even when that cautious approach makes money, the absolute gains are still limited because the starting capital is small. The article said the friend’s choice to cash out after making 6x to 7x, simply because he did not understand the project, was a completely normal reaction.
The article says trades like this depend on luck and intuition
The author wrote that when a person is dealing with something he does not understand, what he is doing is basically guessing. And if it is a guess, then whether the outcome is a 10x return or a 100x return, the essence is still “99% luck and 1% intuition.”
He added that luck and intuition are deeply personal things and cannot be generalized. So, in his view, everything about the friend’s case was normal and reasonable—from the initial buy to the decision to sell after a 6x to 7x gain—and there is no reason to regret it.
What the author sees as the real takeaway
The article said the biggest thing in this experience was not how much money got made, or which token was found. That was not the point. The real highlight, it said, was that by following developments in the crypto ecosystem closely, the participant noticed the trend early and joined it while keeping risk under control, picking up a new experience, new feelings, and even a little excitement.
The author said that was enough.
The article closed with a disclaimer saying markets carry risk and investing requires caution. It said the piece is not investment advice, and that readers should judge for themselves whether any opinion, view, or conclusion in the article matches their own circumstances, with responsibility for investment decisions resting with the user.
