Monday, September 17, 2018

Value Investing Case Study: Does it apply to Crypto?

For some reason, I managed to stumble upon this article by Dr Wealth that was written back in Feb 2018 regarding his LTC trade.

Simple TLDR is that the NAV was $1.63, but was trading at $0.60. Dr Wealth had quite high confidence in the integrity of the underlying assets, since they were largely in (1) investment properties that are yielding good rental, (2) fixed deposits and (3) cash and bank balances. These kind of assets do not need to be marked down deeply when considering their salvage value.

7 months later, buyout offer with a 54% return from entry.

Fantastic trade.

This reminded me very much of my Saizen REIT trade which saw me realize a total gain (dividends + gain) of 40.4% over about 1.5 years. I consider it as one of my early masterpieces because of just how sure I was that all the evidence is pointing towards good future gains. Yes, I had strong evidence.

Now, buying assets at a discount to NAV is a pretty good strategy if it satisfies some criteria:
1) there should be enough upside premium to be earned after conservatively marking down assets
2) there is a reasonably good chance that you as an owner can eventually realize this premium

Question. Does this apply to crypto?

Answer: Largely, no, it does not apply.

Back in December 2017, I was very bullish on DGD that I happily shared my pick after doing months of in depth research. I had a rather straightforward P/NAV value investing thesis on DGD. Now comes February and DGD starts to boom, and it doesn't stop til even in March and just keeps going higher and higher.

What did I do? I sold a pretty portion pretty much right at the top.


Since then, I've still held onto a fairly decent size of DGD until they started releasing out the governance and I saw first hand how the governance was working out. Spoiler: it's not good.

What we saw was a medium post with a full proposal to withdraw and use $20m of DAO funds that was up for a Carbon Vote.

I'm no math genius so I've used their math, but this means that each DGD is now only backed by ~0.2 ETH per DGD. That's an instant -13% in the "NAV" of DGD in ETH based on this one vote.

Sure, the funds will be spent on "stuff", but everything that the project done so far has been very depressing. Their gold backed token, DGX, is mainly only trading on Kryptono, which based on a very recent reportinflates their actual trading volume by 190X. Yes, that's not 190% (2 times). It's a freaking 190 times. I've eyeballed and compared the data with my own data on exchanges that I was collecting and analyzing just the weak earlier, and the report looks solid and corroborates a lot of my own findings.

What else? Well, circulating supply of DGX is only ~$2.6m, which is hardly enough to generate any fees to add on a DCF valuation. You don't need to trust me, you can verify. In the past half year of operating, they've managed to collect $6500 USD worth of fees. Those fees are to be shared among the token holders. Each holder gets $0.003 per DGD. They need more like $260m DGX in circulation to even have any impact.

Also regarding the governance - the tight supply of just 12/28 accounts controlling 51%/67% of the votes respectively also doesn't bode well with me, considering how they approved to sell ETH at the market bottom. Why not reject it and vote to disburse a smaller amount, like $2-5m? Why not force out a better and more elaborate budget and proposal? These oligarchs are either stupid or have an ulterior agenda. Either way, it does me no good.

So, what did I do? I sold off my remaining DGD positions at 0.22 ETH and 0.19 ETH respectively. Yes, those final positions booked a small loss relative to my entry positions. However, I overall made good profit considering the staggering amount of profit that I booked earlier in late Mar when DGD was peaking.


haters will say I'm lying, but I publicly post a lot of my moves


It's a less than ideal ending, but this is a good case study of why information needs to be constantly assessed to check that your investing thesis still holds true.

Learning points:
1) Few crypto can be valued on a NAV basis, unless they are explicit securities
2) There are no "forever" positions. Be willing to change your mind when circumstances change.
3) You have no idea when strong supporters of a crypto has dumped them (like me)

And regarding that last point, that's the problem with crypto eh? I've highlighted it before:

At the end of the day, I still do my own research, think very hard about the future, and I pull the trigger and make my own decisions on what to buy, what to sell, when and how much.

If you can't be critical on projects, accepting of flaws and open to new ideas, this space will kill you very quickly. Ideas a few months ago which I though were great, I have dumped and I now own zero. **COUGH COUGH KYBER COUGH COUGH**

That's the problem, ain't it? If you follow people to buy stuff, you are definitely buying it later and usually higher than them. And when they exit, you never know.

For people who blindly bought into DGD, just a final heads up that I truly hold zero of it now.

Saturday, September 15, 2018

Last month my savings account interest was 2.48% pa

I push out mostly crypto content these days, but I remember the good ol' days when I talk about squeezing blood from rocks to make your money work for you.

I made a post about the best place to park your money, and though it is a bit outdated, I'm glad to say that the Citibank Maxigain account that I have strongly recommended people to consider is chugging along very well. Based on the interest I received last month, the annualized return is 2.48%.

Even CIMB, who is well-known for usually having one of the best fixed deposit rates in town is only able to offer 1.84% for a 12m tenure in their recent promotion.

And mind you - the Citibank Maxigain is NOT a fixed deposit. It's a savings account. You can withdraw anytime you want.


The interest rate market is FINALLY moving up, after years of ZIRP, post-financial crisis.

The last I heard, housing in Australia has FINALLY overheated and is coming down. What else do you expect from interest-only housing loans? Lol.

In 2016 the housing market was shook a bit by interest rates moving up from zero, along with a lot of cooling measures, but that trend reversed. I was honestly hoping for the housing market to shit itself deep and I can pick up a private property of my own. Oh well. Next time. I just wait to wait, haha.


Now with rates going up, can property prices continue to stay elevated? Can existing property investors increase rents to tenants, can they find tenants, or can they flip the property for a profit?

Next to no one in my generation has a private property and none are even considering. Balance of sale flats seem quite popular.

Sometimes I really wonder who are renting out all these properties, especially the newer condos.

Anyway, that's just my small rant on interest rates and bank deposits.

Look into the Citibank Maxigain account if you're like a flexible but decent yielding place to park your money. I explained a bit more in my older posts. Pretty much everything is still the same and relevant - just that rates are now even higher, and almost all banks have been slow to adjust up their rates. Why pay out customers more money, amirite? Heh.

Monday, September 10, 2018

Guys Im finally losing money in Crypto

Been crazily busy with work, life and of course crypto the past month plus.
Things should start slowing down for me in late Oct or Nov, and hopefully I will be posting a lot more then.

The BTC 2013-2014 bubble pop saw BTC price decline 92%. That's scary. It took 3 years odd to reclaim back those ATHs.

ETH is currently sitting at an approximately 85-86% drawdown.
If we match those 92% drawdowns, we are looking at $110.
(Why would we? Why should we?)

The past month has been particularly brutal. Can you imagine that I've managed to stay abovewater the entire time until just recently? I thought I was doing really well until I got clubbed over the head.

I am fine to share that I have finally sunk below my capital that I've put in. Yup, that's right. Even with all my good ICO flips, long swing trades, short term trading and arbitrage profits to buffer me, along with an average entry that I thought was pretty low, I am finally in losses.

Not trying to hide it.
It is what it is, what more can I say?

That's right, you could actually enter now and you'll have a better average price than me.
But of course you won't. Heh.

There is a lot of concerns and worries about ETH in particular. I am largely unfazed.
I've broken into my warchest and I'm buying the dip.

Yall might think I'm crazy, but let's be real for a moment.

No one cares what's your portfolio IRR on 10 Sep 2018.
And why is that? Because the only value that matters is the day you sell.

Unfortunately for me, my journey involves my portfolio going into the shitter first, before it subsequently (hopefully) takes off. And I'm okay with that.

My eye is on the prize.

I didn't sign up for slow and steady, low risk, low drawdown returns.
That's a rolling fixed deposit.

I knowingly and willingly signed up for this crazy crypto shit.

If it was so easy, we'd all be millionaires, right? Heh. But as always:

No guts, no glory.
No brain, same story.

Stay safe in crypto. If you're uncomfortable doing anything, I suggest you just sit on the sidelines and watch me make a fool of myself.

As always, feel free to counter-trade me and profit from your wisdom that cryptocurrencies will all go to zero. No point having such knowledge and making no money from it, amirite?

Thursday, September 6, 2018

Wew Crypto Reeeeeeeee


Markets are crazy today, lol!

Positions got closed out at 28.7% and 92% profits respectively.

And this is after manually reducing positions and taking profit earlier at 147% and 238%.

Just another day in crypto paradise.


Only trading position left is ETH which is, obviously, underwater at this point of time.

Oh dear me. Whatever will I do?

Just wait lor.

Haha.

Would you like to counter trade me? You can, here on Bitmex with up to 100x leverage to go long or short! *wink wink*

Sunday, September 2, 2018

3 Crypto Weeks Later...

3 weeks ago I posted that I was buying and leveraging up...


Then, BTC was ~$6500 (my entries were lower).

Today it is $7200.

How's my Bitmex ROE looking?


Looking fantastic, thank you very much. The top 3 are my same positions as my previous post. The last row is my additional position in ETH.

Whoever is the crypto whale that signed up with my Bitmex ref link, bless you and I hope your trades has been going swimmingly well, as mine have.

For everyone else, Bitmex is where you can trade up to 100x your capital that the price of Bitcoin will go up or down. Yes, you can short on Bitmex, up to 100x. That's right, you can bet on Bitcoin going down and make profits from it. Come and bet against me. Crypto is a stupid scam right? Less talk, more action. Step right up, place your bets.

If you think you've got the balls to put your money where your mouth is at, then prove it. I find it a cry and shame to hear people who are self-proclaimed geniuses at spotting bubbles and pricing ponzis, but with no spine to bet what they preach.

I might be an idiot, but at least I'm an idiot with balls.