August have been an amazing month for the stock market and crypto space. It was also the first month for me to process my Axie scholarship payout for the first time at the end of this month and cashed out roughly 38,000 SLP in the process too!
Managing the scholars was not easy, and we had to make the tough decision to kick out a few scholars due to poor performance, lack of motivation and dishonesty issues. So far, we have 21 scholars under management, and we have currently stopped breeding more Axies as it is unprofitable to do so and more cost-effective to buy directly from the marketplace instead.
Aside from the Axie scholarship, I also realised some profits from my stocks portfolio with a net gain of +31% in realised profit. I have been trimming my stocks portfolio over the month as I become more and more bullish about the crypto space and all the alpha I am missing out on.
It might look like I am over-allocating to crypto but I have built up a solid thesis and am convinced that crypto is my flight ticket towards financial freedom, not stocks. More on this later.
August: NFT Mania
With the bullish recovery of Bitcoin and the broader market in general, we saw NFT catching on the mania after the success of Bored Ape Yacht Club, Pudgy Penguins and 0N1 Force, which are collections which blew off and now have floor prices that are out of reach for most people.
Generational wealth were created for those with tons of NFTs, but also props to them for holding while others were screaming at a bear market.
If you look over the ETH burn leaderboard, OpenSea, the leading NFT platform, had the highest activity in the entire Ethereum ecosystem and burnt nearly 20K ETH into oblivion now.
I have also started allocating capital into NFTs myself if you have been following my Telegram group, so there’s that. If you are interested in my NFT collection, here is a mini snapshot of my current collection.
I’m still a beginner in this space,and, and I am still out there hunting for some cool looking NFTs and ones that I think will blow up and provide tons of utility. Props to you if you can identify some of them!
Portfolio performance wise, I have been doing great but I have yet to factor in my NFT allocation as they cannot be recorded under StocksCafe. If you can see above, my portfolio of crypto + stocks is making stock market indexes look like fixed deposits returns. Yes, I know. Unfair comparison, but returns are absolute, and the most accurate judge for risk-adjusted returns over the same time period.
Portfolio allocation wise, I have been trimming my stocks and taking profits while adding on more into crypto.
Sorry to my Stocks readers, but the risk-reward ratio of crypto outperforms stocks by miles and I am going to put my money where my mouth is. Stocks just don’t offer the same level of alpha as crypto do.
FYI, Ethereum now takes up nearly 50% of my entire net worth, and I am planning to add more in the future, either to yield farm it further and generate more ETH over time, or store them in NFTs which can be flipped for more ETH. I have not thought of a proper strategy on that yet.
As you can see, the portfolio outperformance above is the result of an overexposure into crypto, with nearly 84% of my entire portfolio allocation now tilted towards crypto.
Depending on how greedy the stock market is, I am also considering taking all my profits from stocks and exit the stock market before the impending blackswan. The stock market charts don’t look healthy at all as it breaks all time highs every week with no signs of stopping, which spells trouble for me the way I see it. Not financial advice so please make your own judgement please!
Crypto wise, I might be re-allocating my gains back into stablecoins in the meantime to get a decent yield from it and grow my capital slowly until the crypto market cools down and I can buy in further into my bullish allocations when a great entry price presents itself.
My Strategy: Concentration > Diversification
My goal right now is to concentrate on my high conviction bets (namely Ethereum/AXS/Fantom) and just watch over them closely.
Net worth wise, ever since the increase in exposure to crypto, my overall net worth has grew by nearly +60% this year. I am closer to my goal of a 100K portfolio than ever before, and to get there, I am going to take profit along the way and reinvest my capital into better horses.
Rule No 1: Don’t lose money, Rule No. 2, don’t forget Rule No. 1.
Am I too crazy for over-allocating to crypto? Maybe. But I have done my research, and I think the potential of crypto is just so huge that many people are missing the gold pot here. There is definitely asymmetric risk-reward in the crypto space, and my goal is to find them and take advantage of it.
Time will tell whether I am right or not.
Sneak Peek on the Portfolio Challenge
If you have been reading on of my older post on comparing 3 portfolios of stocks, crypto or a mixture of both, then you should be curious to know how they are doing right now.
For those who have no idea what I am talking about, you can read more about the post here.
The current portfolio that is winning is….
Portfolio 3! (100% Crypto Portfolio picked by Yours Truly)
+52.97% in 2 months. Not too shabby at all. (The 3 portfolios incepted on 20 June 2021)
For comparison sake, Portfolio 1 (Full Growth ETF) is currently +4.83% and Portfolio 2 (Community Pick of Stocks + Crypto) is currently +30.14% in the same time period.
Crypto is Alpha
What is the moral of the story here? Crypto is on the upper rankings of the efficient frontier and offers way better risk-reward for a long term investor.
Portfolio 2 and 3 consist of crypto and they are not only outperforming Portfolio 1, but also outperforming the stock market indexes.
Still not convinced about crypto or too lazy to research? Well, sure. Fortune favours the bold, and those who are hungry enough to learn more will do their own research, dive in to understand the underlying fundamentals, and invest with conviction.
If you don’t understand Ethereum or blockchain technology in general, it is going to be a tough century for you in my honest opinion.
The experiment portfolio performance may only be 2 months long, but over the past 10 years, if you only bought Bitcoin, you would already be a millionaire and outperform every single hedge fund in existence.
Complain about missing the past 10 years? Then get to work now, understand the technology behind the space, and make the best out of the next 10 years. That is what I strive to do too.
Crypto, NFT, DeFi, they are not going away any time soon. It takes time for mainstream adoption, and my guess is by 2030, everyone will have their own crypto wallets and by 2040 mass adoption will take place and everyone will be transacting their monetary value through the blockchain. Time will tell if this is true.
If you are bullish on crypto but not crypto-savvy, you can utilise CeFi solutions to earn passive income
For centralised crypto solutions, I am currently earning passive income on the following:
- Hodlnaut (Earning interest on Ethereum/Bitcoin/USDT/USDC/DAI)
I am getting consistent returns every week and it is also compounding, which is a good thing as compound interest is the most powerful way to build wealth while I am literally doing nothing.
This path is more for passive investors who do not want to take on huge DeFi risks and if you are curious, I am earning my interest in ETH with my deposited ETH/BTC and stablecoins.
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.
If you think all these are still too complicated, you can consider joining my telegram group where I share articles, investment opportunities and more research based content on an almost daily basis. You can also ask questions, and take part in polls to see how others think as well!
Join My Tele Channel Here For Blog Updates And More!
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?
Earn Yields on Those Crypto With These Platforms
You can read up more on my post here to learn more about Celsius and Nexo which give you interest on your crypto assets
Or read up more on Hodlnaut here which is a Singapore-based crypto lending platform with market beating interest rates
What is Bitcoin? Answers here
Or do your due diligence on Bitcoin in my post here where I debunk some of the myths regarding Bitcoin.
What is Ethereum? Simple Guide Here
I did a bite-sized article on Ethereum for you to get a crash-course on what the buzz word is all about here.
Gemini Exchange (My Favourite Crypto Exchange)
Also my crypto exchange of choice Gemini here if you are looking to buy your first crypto!
Too Many Crypto Platforms? Here’s a Crypto One-Stop Solution
If you think there are too many crypto platforms out there, here is a simple solution for you. An all-in-one app for you to earn yield, trade, invest or borrow crypto with high security and assurance. Check out my Matrixport review
What is Decentralised Finance (DeFi)?
Or do you want to learn more about DeFi in a simple to understand manner? Click here to learn more
How to Value Crypto Assets?
Learn more about how you can put a “fair value” on crypto such as Bitcoin, Ethereum and more here
Crypto Referral Links (Click and Sign Up)
Gemini Exchange: Deposits and buy US$100 or more crypto on Gemini and you will earn US$10 in BTC.
Coinhako Exchange: You can create an account by clicking the link and then enter promo code: COINGECKO when doing a buy/sell and enjoy 20% trading fees discount!
Hodlnaut: Earn US$20 in BTC/ETH/USDT/USDC/DAI for free with your first transfer of US$1000 or more in the corresponding crypto asset of your choice!
Celsius Network: Earn US$40 in BTC for free with your first transfer of US$400 or more in any crypto asset and wait for 1 month!
Matrixport: Get a $1288 free coupon trial to try their product and earn $20 in USDC when you sign up successfully and become a qualified client!
Nexo: Earn US$10 in BTC for free when you transfer US$100 or more in any crypto asset of your choice!
The Power of Low Fees (My US Broker!)
One huge advantage I have as an investor is paying very minute fees which can really eat into returns in the long run because I am using Firstrade to buy US Stocks which has absolutely $0 fees and extremely fast wire transfers for deposits and lightning fast trade executions.
Ever since I switch to Firstrade last year as my main investment vehicle, I saved up on a ton of fees and hence able to achieve way better returns than before. I saved up more than 5 times the fee paid in 2018, 2019 and 2020 this year due to the switch and I am really happy thus far.
Of my entire investments in 2020, fees only take up 0.1% of my entire portfolio! (2018+2019+2020 combined across all brokers)
Alright that’s it! For now, think long term, tune out the noise and avoid the temptation of gambling meme stocks, think of the companies that will do well in the long run simply find bargains/dollar cost into your positions. If you need some inspiration for companies to research, you can check out my post on 5 stocks to buy if the market crashes here.
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.