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Published Dec 30, 2022

382 | Name Your Fear, Control Your Risk

Explore the art of risk management with Brad Barrett and Jonathan Mendosa as they dive into effective financial strategies, navigate the complex housing market, and tackle the unpredictability of cryptocurrency, all centered around maintaining stability and financial independence in uncertain times.
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  • Volatility

    The current financial landscape is marked by significant volatility, reminiscent of past economic upheavals. and discuss how these times echo the financial challenges of the 1980s, with unpredictable interest rates and inflation impacting both housing and cryptocurrency markets 1. Jonathan highlights the importance of identifying fears and controlling risks to navigate these turbulent times effectively 2.

    It's not based around options or puts or secret strategies or anything else. It's just common sense guidelines. It's controlling your risk.

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    The duo emphasizes the value of financial independence as a buffer against such uncertainties 3.

       

    Crypto Risks

    In the realm of cryptocurrency, security and counterparty risks are paramount concerns. Jonathan warns about the dangers of keeping cryptocurrencies on exchanges, especially those offering high yields, and advises moving assets to personal wallets to mitigate risks 4. He stresses the importance of understanding the mantra "not your keys, not your coin," highlighting the potential for exchanges to become insolvent and seize assets 5.

    If you don't have the keys to it, if you're not the custodian of it, you are not only subject to the volatility and the risk of that individual crypto, but you are also subject to the volatility and the risk of the exchange.

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    Brad adds that the recent insolvency of platforms like Celsius underscores the critical nature of managing counterparty risk 6.

       

    Third-Party Control

    The discussion further explores the implications of third-party control over cryptocurrency assets. Jonathan and Brad explain how platforms like Celsius have made catastrophic decisions, leading to insolvency and the freezing of investor funds 6. They emphasize the necessity of self-custody to avoid such pitfalls and the importance of understanding the financial landscape to make informed decisions 5.

    You can't withdraw it, closed off shop for withdrawals, so your money is stuck here.

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    This situation serves as a stark reminder of the risks associated with leveraging and the need for vigilance in managing one's financial assets 7.

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