The statement "the best investors are dead people" is not meant to be taken literally, but rather as a metaphor.
It refers to the idea that investors who take a long-term, patient approach to investing, similar to a person who is no longer alive and not making active decisions, tend to perform better over time.
Millions of dollars worth of Ethereum presale are left sitting unclaimed, with some wallets amassing more than 10,000 ETH inside them. That would amount to over $18,000,000 at the time of writing, and only costing them $3,000. The presale for Ethereum was quoted at $0.3 per ETH, with a remarkable 6,000x in value for only 8 years of holding.
Satoshi Era Wallets
Old Ethereum wallets aren't the only ones that experience unprecedented rises in value. In fact, one of the largest Bitcoin wallets from the (over 1 million Bitcoins) is believed to be owned by Satoshi himself from mining in the early days of Bitcoin when most people were neither aware of the currency, nor how to correctly mine it.
The Bitcoins are worth nearly $28.5 billion in today's value, which is roughly 35,572,125x higher than Bitcoin back in July 2010 at it's lowest conversion rate. While it is believed Satoshi may be dead, or at the very least unable to access the wallet, it is a testament to the saying that the "best investors are dead people."
Back in December 2021, a Satoshi era wallet was activated after previously assumed lost. The address contained more than 500 BTC, where the value rose from $8,400 to over $14 million at the time of writing. The largest gains in the world came from the least active wallets investing in groundbreaking technology.
Where does the saying come from?
This idea comes from the observation that frequent trading, impulsive decision-making, and short-term thinking can lead to suboptimal investment outcomes. The reasoning behind this perspective includes the following factors:
Long-term focus: Dead people cannot make impulsive decisions or react to short-term market fluctuations. They hold onto their investments for an extended period, which often results in better overall returns.
Emotion-free investing: Dead people cannot be affected by emotions like fear or greed, which often drive poor investment decisions. Emotional investing can lead to buying high and selling low, rather than adopting a rational and disciplined approach.
Lower costs: Frequent trading can result in higher transaction fees and taxes, which can eat away at investment returns. A passive, long-term strategy minimizes these costs, thus improving net returns.
Compounding effect: By holding onto investments for an extended period, dead people can take advantage of the compounding effect, which is the exponential growth of both the principal investment and the returns it generates over time. This can lead to significant wealth accumulation.
What could this mean for Solana?
Solana is currently trading at (roughly) only 100x from its lowest price point. When comparing to Ethereum, or Bitcoin, the profitability is not nearly as high. However, one must put into account the length at which these wallets held Bitcoin and Ethereum, respectively.
Bitcoin has been around since 2009 (13 years), and Ethereum has been around since 2013 (10 years). Solana, on contrast, is still in its infancy, as being launched in 2020 only puts it at a young age of 3 years old.
If Solana can prove itself as a decentralized, stable, and used protocol, gains from early investors could easily match those of ancient Bitcoin and Ethereum wallets. The hard part is, can you withstand the short-term noise and unrealized gains sitting in your wallet? That's why the 'best investors are dead people.'
It is essential to clarify that successful investors are not literally dead people but rather those who adopt a patient, long-term, and emotion-free approach to investing. This idea emphasizes the benefits of staying invested, ignoring short-term market noise, and focusing on the long-term growth of a well-diversified portfolio.