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Finals are over! And that concludes my first year in NUS Business School. The workload in University is tough especially when I am focusing on so many things but I am glad I managed well this semester and hopefully the results will speak for itself.
Aside from school and the lack of blog updates, many things have been happening around the world and there are just so many updates that I don’t know where to start.
Crypto is becoming mainstream as more and more people get into it but again, there are so many skeptical people that the crypto space is really still in its infancy; before more people understood the purpose and value proposition that crypto assets have that will completely change the way we live.
I use StocksCafe to keep track of all my investments (include Robo) + research on stocks. You can also view my portfolio as well as many others so you can compare your own performance with other investors. If you are interested in signing up, you can use my referral link to sign up and access premium features for 1 extra month for new users. (3 months)
So what have I done and what portfolio changes have I made following the changing macro trends and developments around the world?
1. Took profit from Syfe Equity100
I took profits from my Syfe Equity100 portfolio this month mainly due to 2 reasons:
- Opportunity Cost
While I believe Syfe Equity100 offers beginners and advanced investors the benefit of passive investing and peace of mind, I took profit because the further I researched and understood the cryptocurrency space, the more convinced I am about the future of the asset class. There are so many things you can do with crypto and not just HODL-ing (Buy-And-Hold) them like you would with stocks.
You can do things like Liquidity Mining, Yield Farming, Lending, Borrowing, Earn Interest, Governance, Lottery (Gamification), NFTs and so much more in crypto than simply buying Bitcoin and call it a day.
The more you understand and the earlier you find out about all the potential opportunity this space offers, the better the rewards reaped in the long run.
For those who are not yet savvy or not a huge risk-taker, I will be venturing into it myself so you can see if this is all a fad or something life-changing. Time will tell and my blog will be the testament to it.
Opportunity Cost is too big to ignore
Regarding opportunity cost, I mainly had 2 criteria in my head, and those were: “Will the re-allocation bring me higher risk-adjusted returns over 5-10 years?” and “Will this re-allocation show a sharp outperformance?”
As investors, the fundamental reason we invest is to be able to beat inflation and to get higher returns from our initial capital. And the number 1 most important thing that drives return is Asset Allocation. It is the driver of Alpha and what determines our annualised returns that can be forecasted.
If you hold a bunch of bonds, don’t expect to make more than 4%~ returns, if you hold a bunch of stocks and bonds, don’t expect to make more than 10%~ returns, and if you hold a bunch of cash, don’t expect to make any returns if you just put it in the bank.
So the reason why I took profit from Equity100 is because crypto assets fit both criteria. I am able to generate higher returns and seek more alpha from my crypto vs Equity100 and further diversify my portfolio since stocks and crypto are fairly uncorrelated.
The opportunity cost we are talking about here is insane because in crypto, even if you are a low-risk taker, you can easily get 10%-20% or more interest on your Stablecoins and that alone might be more worthwhile than taking so much risk into equities and risk losing them to a crash or worse, the equity fund can’t even generate positive returns over the long run.
2. Bought more stocks and crypto
In the month of March and April, I re-allocated my Equity100 funds into both the stock and crypto market.
Aside from the re-allocation, I added fresh funds and my remaining 10% cash reserves in my war chest are fully deployed and working harder for me as we speak.
Some of my new positions added recently are:
- Teledoc Health Inc (TDOC)
- Fiverr International (FVRR)
- Unity Software (U)
- Zillow Group (Z)
- Altimeter Growth Corp/Grab (AGC)
- Coinbase Global (COIN)
- Etsy (ETSY)
- Pancake Swap (CAKE)
- Autofarm Token (AUTO)
- Binance Coin (BNB)
- Zilliqa (ZIL)
- Filecoin (FIL)
That’s a lot of new positions. I know. Below are the breakdowns of how my portfolio looks like right now and how it fared:
Originally when I first wanted to diversify into crypto, I wanted a targeted allocation of 25% crypto and 75% stocks, but since then with the massive growth of Bitcoin and Ethereum, which are pretty big allocations in my portfolio, has slowly ballooned and became a huge part of my portfolio.
I am not going to constantly buy and sell crypto and just like stocks, I will remain a net buyer of crypto through dollar cost averaging every month.
During the market dip when Biden announced plans of hiking tax rates, I bought in aggressively to take advantage of the huge discount in the crypto market.
Aside from HODL-ing my crypto, I am also putting them to work through Yield-Farming and the returns are incredible (I’m talking 100%-500% APY). Only do this if you are comfortable with DeFi and understand the underlying risk.
My Q1 Performance Year-To-Date
As of 30 April 2021, my Stocks+Crypto portfolio is crushing the benchmark indexes on both a Time-Weighted and Annualised basis.
On performance year-to-date, I am glad to see my portfolio outperforming 332 other investors on StocksCafe but these can change really fast.
As of now, it proves that crypto is able to drive higher returns for an investor and again with due diligence, hard work and research, you can find many undervalued projects in the crypto space which can provide high risk-reward ratio for you.
Points to Take Note
Investing in crypto is not all rainbows and butterflies. There are massive amounts of risk but in return the rewards are way higher than you can expect on the stock market.
There is always a give or take in investing, as nothing that offers high returns is without the risk as well.
Before you decide to jump into crypto due to FOMO and greed, here are some things to take note of.
- Lack of Due Diligence (Not understanding the crypto asset and blindly entering based on price and other’s opinions)
- Exchange Hack Risk (There are many scammers and hackers out there in the crypto space)
- Volatility-induced irrationality (Many new investors panic when they see huge price fluctuations resulting in panic selling behaviours)
- Hot Wallet/Cold Wallet (Need to understand the difference between the two as that is how you will store your crypto assets)
- Smart Contract Risk (This applies to those who are already in the crypto space, there may be smart contract bugs or loopholes that can drain liquidity so do take note of the project before putting your money in)
Some of these points apply to Stock market as well, and to new investors, if you are unsure whether you can stomach the volatility, you should start from the stock market first.
If you are uncomfortable seeing your net worth drop 50% or more, you should not be in crypto.
Crypto is not for everyone
At the end of the day, your investment portfolio should reflect your own personality, that is why everyone’s portfolio is different and it is futile to copy another person’s portfolio if you don’t understand what you are doing.
Crypto can be a great place for investors who knows the risk of the asset class but appreciates the innovation and technology driving the space and understands the risk-reward ratio over the long term.
If you are an individual who simply cannot take more than a 5% paper loss or cannot trust anything that is not MAS regulated, then please stay out of crypto at all cost.
Risk and Return goes hand in hand. If you are not willing to take 50% or more potential drawdowns, don’t expect to see 200%, 300% or 600% upside returns on your portfolio over the long run.
Every portfolio follows the Efficient Frontier with some being on the lower end and some being on the higher end, the trick to get market-beating returns is to be on the higher end of the spectrum consistently and effectively and understanding that asset allocation drives returns.
When it comes to investing in anything, I always go back to the same mantra. This applies to both new, intermediate and advanced investors:
Know what you own, and why you own it
This quote by the greatest investor of all time says it all. Always do your own research before investing into anything. Don’t blindly invest because of someone else’s opinion or because someone made 100 times their money from it. Investing is all about calculated risk and if you can’t calculate your risk, you are simply speculating.
Do research on your investments just like you would before buying a new phone, a new bag, a new shoe or going to a new company or new school.
You spent months or years to accumulate those savings. Don’t lose it because of laziness or greed. Do proper research and be curious.
Going Forward (Q2 and beyond)
Moving forward, I will be focusing more into the crypto space and research into even more projects. My stocks portfolio is more or less fixed as my positions are growth oriented and the companies I am invested in are mostly younger companies with lots of room for further growth.
The content here is for informational purposes only and should NOT be taken as legal, business, tax, or investment advice. It does NOT constitute an offer or solicitation to purchase any investment or a recommendation to buy or sell a security. In fact, the content is not directed to any investor or potential investor and may not be used to evaluate or make any investment.
Do note that this is not financial advice. If you are in doubt as to the action you should take, please consult your stock broker or financial advisor. (Or contact me!)
For those who are already into Crypto
Want to learn how you can earn high yielding interest rates on your idle crypto assets in a secure, safe and easy manner? You can read up more on my post here or do your due diligence on Bitcoin here and also my crypto exchange of choice Gemini here if you are looking to buy your first crypto!
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