500 Words — Day Twelve: Escape Velocity
An object’s escape velocity is said to be the velocity required to escape the gravitational attraction of a mass without requiring further acceleration. The escape velocity from the Earth is around 11.2 km/s or 25,000 miles per hour. It requires a lot of initial force to take an object at a steady position to get it going that fast. It requires even more force to move a heavy object like a rocket. So much force that it literally takes a controlled explosion to get to that point.
While there is an escape velocity in the physics sense of the term, I also think about the escape velocity of money. The point at which the return on money is sufficiently fast such that it escapes the necessity of performing work while still being able to satisfy one’s needs and desires. One of my dreams is reaching that escape velocity with my passive investments so that I can pursuit whatever I want. A nice house, a cool car, and the freedom to travel the world as I please and work whenever I want. As long as I don’t decelerate and burn that wealth engine too fast, I can continue progressing until I’m literally to the moon.
Speaking of to the moon, in the cryptocurrency bull market of 2017, I first dreamed of escape velocity. To see my net worth double and triple in a matter of a few months (or even a few days close to end) was insane. The euphoria was crazy and one couldn’t help but to stare at the charts in disbelief. Unfortunately, that sugar high came crashing now and reality hit pretty hard. The dream of escaping the 9–5 job quickly disappeared and the switch to a more conventional investing approach was taken. A lot of dollar cost averaging on the way down. The good news was that I didn’t lose faith in my investment but tried to learn more and really challenge those underlying beliefs rather than relying on the emotion that gave me the false fantasy the year prior.
So, now we have gone over another large hill in the cryptocurrency market and perhaps, even the stock market. There are perhaps a lot of folks feeling the euphoria I felt four years ago. Perhaps they project the trajectory of their investments and believe they have reached their escape velocity. But that’s perhaps where the metaphor ends. Because a lot of those returns are inflated and not based in reality but on public perception. Rather than going fast, you just perceive that you are going fast based on others telling you that you’re going fast. Because the force required was never applied, it was overestimated. Elon Musk promised people on Mars and you got a car that can drive itself — sometimes. Cryptocurrencies promise monetary revolutions and unbanking the unbanked and you got collectable tokens and decentralized casinos.
Perhaps monetary escape velocity is achievable. Some people do reach something that looks like it. But what feels like it versus what it actually is requires something no euphoric investor wants to do.
To sober up.