Tuesday, March 12, 2019

Hyflux Horrors in 2019

Y'all know, I generally don't poke my nose into other people's shit.

But Hyflux is one of those stinking shits that smell so terrible, it's hard to ignore.

So I heard from Bloomberg today that investor's might lose up to 90%?

I think the better report is actually by CNA which works out the min/max that can be recovered, which is between 5-15%.

People can discuss and argue all they want: about what they think the government should bail out, why it should be bailed out, how it's a small sum to bail them out, how NOT bailing out will "shake investor's confidence" and we can all argue until the cows come home. I highly doubt it'll change a damn thing.

I've said it before, I don't think the government will bail out Hyflux, and I don't think they should.

It was a bad investment into a bad company, that's what it is.

... If you're not vested, I would implore you to find some good reasons to get yourself involved in this mess. I can't find any, other than a 6% yield, which is meaningless if you only get paid for a few years and lose the principal.

To me, it's a no no. I'm staying away and I'm just going to watch this show.

Will this subscription yet again becomes oversubscribed by the retail horde? I'm counting on you, aunties and uncles. - GMGH, May 2016

Did you know that there is a Hyflux telegram group? And by my eyeballing, it is indeed truly filled with many aunites and uncles. It's rough being a retail bagholder. I salute all those people trying to "fight" for something. Shoutout to Sgdividends who has been following the whole case very closely.

But honestly, the prospects of a "good" outcome is very weak, IMO.

They took a risk and a gamble and they lost, that's pretty much it.

While I might sound like I'm being a heartless bitch about things, the sooner you learn that in finances that your emotions and feelings count for diddly shit, the sooner you can cut through the bullshit.

The moral of the story is: If you're downside protection strategy involves the government bailing you out, it's PROBABLY not a good strategy.

Tuesday, March 5, 2019

Crypto Markets Thoughts Mar 2019

For the people following my tweets and retweets on Twitter, I doubt you'd gain much from this post. Perhaps just a more organized and presentable format than Twitter which is a very haphazard medium.

Recently, the biggest discovery for me was the Uniswap AMM model. Basically its an algorithmic automated market maker. It's is very interesting for several reasons. First off, it's rent-free. This means that the developers make absolutely nothing from its success. They managed to build it because they were given a grant by the Ethereum foundation. Basically, they created a token-less, rent-free model of Bancor. The grant they received was $50k. Guess how much Bancor raised in their ICO? $153M.

Let me do the math for you. Bancor has a budget 3000X larger than the Uniswap team. And guess what? Uniswap does ~70% of the volume that Bancor does. And Bancor has been around for a pretty long time, while Uniswap launched a little over 3 months ago. The growth has been astonishing.

The next interesting thing is how Uniswap basically works as a nominated money changer that is open 24/7.

Anyone (including you) can basically "fund" the money changer by giving him capital, and he perpetually quote rates and fills exchange requests. Every single time the money changer completes a trade, he helps you take a 0.3% cut, and FOR FREE. Remember, this is a public good, rent-free model.

There is no token.
There is no profits going to external parties.
All profits goes back to the people who have put in liquidity.

Basically, you provide liquidity and you get paid whenever people utilize your liquidity. Simple, ain't it?

It's an extremely interesting MARKET NEUTRAL strategy, which there are very very very few in existence, even in traditional markets.

Anyway, explaining the algorithm of AMM is a bit complex, but essentially as long as you were already going to simply hold your crypto assets, you stand almost no risk by contributing liquidity, while you can enjoy the upside of skimming 0.3% of every trade that occurs by Mister Money Changer (Uniswap).

The perpetual 24/7 nature of Uniswap brings me to believe that in the future, projects will raise funds and upfront announce the intention to allocate funds to create and start a Uniswap liquidity pool, alongside the traditional strategy of listing on "regular" exchanges.

People are just starting to understand the importance of liquidity. I can never stress how important liquidity and market depth is.

The last point about AMMs (you will need technical knowledge to understand this bit), is that they basically provide a native, on-chain price oracle, kept accurate by funding arbitragers with arbitrage profits. This actually means that it *can* be used as a price feed, though it's probably not a fantastic one. Still, very interesting.

Uniswap and AMMs aside, the next interesting thing for me is regarding the #DeFi movement, which is short for decentralized finance, aka "Open Finance".

Being heavily interested (and invested) into DeFi related projects has kept me on the toes regarding the development of this space.

One of the most interesting aspects that I am enjoying about it so far is the flourishing of multiple avenues to "work" your otherwise idle crypto-assets, and these are mostly through fully collateralized lending.

The range of options vary with risks, the main one being custodial risks. But it is possible to earn anywhere between 3-7% on your crypto assets by "lending" it out.

As I said before, each avenue has different risks. In some, the risk that you assume is catastrophic - the 3rd party absconds with your crypto and you never see anything back. In others, the risk has been reduced to smart contract execution / bug risks - which means that you technically never give up your crypto to a 3rd party. It's yours, but you just can't use it, but you can get it back anytime and no one can stop you. More confusing than it sounds, but it's mindblowing.

It means that anyone can just throw in ETH / tokens into these smart contracts, and whenever they feel like it, they can withdraw with some returns. It's like a perpetual rolling fixed deposit. Or maybe a money market fund. With no questions asked, no KYC/AML needed, processes deposits in 15 seconds, processes withdraws in 15 seconds. It's a super crypto savings accounts with mad interest, that's basically what it is. If this ain't an interesting way to store money, I don't know what is.

For someone like me that is heavily invested in crypto, having my crypto "work" for me instead of sitting idly in my wallets is a godsend. I've been evaluating and trying out a lot of options lately, but I have to say that I am very impressed at how the space is developing and I think it's entirely possible that in the near future you can just lock up ETH without staking in the POS model and still get paid fat chunks of interest.

Interestingly enough, this has also led me to the realization that BTC is a lot more "limited" and constrained than I had initially thought. The limitations of BTC script language means that all the complex smart contract interactions going on in the ETH DeFi space is... impossible to do on BTC without the use of sidechains / another chain or trusted 3rd parties.

There is no such thing as trustless BTC lending (yet).

Basically, outside of payments and a store of value, BTC has limited itself from expanded and extended functionalities.

And once you realize that, you also start to figure out that BTC's Lightning Network dream is also at risk of ever truly becoming reality because of this. It has recently surfaced the amount of issues that the LN has in its current stage, but of course work is being done to improve it.

Yet on the ETH side of things, there's literally 20+ projects and teams working on different scaling solutions which are almost all independent of each other.

Let me rephrase this whole thing:

One problem of crypto is scaling up.

BTC's solution is the LN, and they have a few teams working on different implementations of the same thing.

ETH's solution is SEVERAL solutions, and some solutions have several teams working on different implementations, but ANY solution would scale up ETH, though different solutions have different impacts of scaling benefits.

So BTC has 4 teams trying out 1 way to solve a problem. ETH has many teams, trying out several ways to solve the same problem.

Don't get me wrong, I love BTC and what it represents. But practically, can BTC ever scale up with LN to be the kind of digital money that people would use in the future?

I'm rather meh on that prospects. I still have BTC, but I am extremely more overweight on ETH.

Anyway peeps, this is just the ramblings of a crypto observer. I'm sure that this is just technical bullshit mumbo jumbo for the majority of you, but hopefully it's a refreshing take for some of you, especially those that are not on Twitter.

Not many people dare to be "anti-BTC", but at least I come prepared with reasoning for my stance. The market will let us know who is right in the future.

Thursday, February 21, 2019

Last call to re-evaluate your DGD thesis

As some might recall, one of the biggest and most profitable crypto trades that I made was with DGD that I started buying in mid 2017 which I sold in Apr and I finally exited my position in Sep 2018.

I explained my thesis when I sold off my position in Sep 18. Since then, the price of DGD has cratered 43% in ETH and 55% in USD. Won't toot my own horn because everything is in a bear market, but yes, I believe that DGD's issues are not systematic and there are unique problems that it alone has. I doubt that it will ever recover, and if it does, it will be quickly sold down.

So on top of all the things I've mentioned before, now there is actually going to be a strong competitor against the gold-back cryptocurrency DGX that is produced by DGD.

DGX charges a fee for transferring.
DGX charges an annual demurrage fee.
DGX has fat premiums over spot.
DGX trade volume has limits based on availability of supply and order book liquidity.

It's competitor? Has none of that. And is also about to launch a silver offering.

It's tracks the value of gold with no fees for transferring, no annual fees for storage, miniscule premium over spot (0.15% of spot rate to buy or sell), and finally it has no trade limits and no issue fulfilling any size order that wants to buy or sell.

I don't want to mention the specific token and the project because I don't want to be accused of shilling. If you're that interested and you follow me, you already know what I'm talking about.

I see zero chance of DGX taking off when a better alternative is available. It's not like DGX is so widely used and integrated that it has network value and a critical mass. It doesn't. It's still an open playing field, and they are about to get smacked off the field.

Anyway, I just wanted to point this out for people who missed the news back in Sep 18 that I really hold 0 DGD tokens because it is fundamentally a train wreck. It has proven itself right.

As you all know, I'm almost always bullish about crypto in the long-term, so if I'm bearish on anything, you best believe that I have good reasons to be bearish.

Anyway, just a shameless plug to my twitter. If you want to engage with me, that's the best way to do so. If you want to see what I'm looking and thinking about, all you gotta do is read my retweets and tweets.

Stay strong peeps, I'm not worried about crypto. If you read and experienced the things I have, you probably wouldn't be worried about it either. It's a game about time, and time is something as a retail investor that I have plenty of.

Friday, February 8, 2019

Calling the Bottom...

in COE prices.

Charts from here.

I've talked about COE before a few times, like in 2018 and way back in 2015.

Honestly? If you're one of those kind of "guys" that get a hard-on for cars (they actually look at the cars at the car show, not the car girls), now is a pretty decent time to pick up a car, with COEs this low.

Personally, I don't really get it.

I don't like the luxury and status of owning a car. Why attract gold diggers? There are girls who literally exclude dating guys who don't own cars. That sounds fantastic. It'll be great to never meet such people.

I don't like playing the status game AFTER that of comparing cars either. For me, cars is just a mode of transportation. An expensive mode of transportation. That I have to pilot myself. And maintain. Bleah.

I actually don't even like driving cars. I rather sit down, play my phone or take a nap, and just be chauffeured around. Does driving spark joy in me? No, it does not.

Funny enough, I had a friend a few years ago who was "forced" to buy a car "because of job". Obviously, it's a self-justified reason to own a car. Mid 20s driving a car is quite cool, right? Like I said, it's a good gold digger magnet. Current status? Sold the car, swore he will never own a car again. Why? Just too expensive. After deducting all the expenses for his car from his take home pay, he had almost nothing left. It only took him about a year to realize how ridiculously expensive cars were and he dumped the car after that.

Granted, now it is "cheaper" to own a car, considering the initial capital outlay and the "depreciation" expense over the 10 years of the car. But you know what doesn't change? Everything else, like insurance, maintenance, road tax, parking, ERP, etc etc.

I know A LOT of people like to self justify that they literally NEED a car if they have kids and what not, but I don't have kids so I can't say. But I know of people with children and no car and they manage fine, so maybe it's possible that a car is a WANT and not a NEED?

Who knows. It will forever be one of life's great mysteries.

Seriously though, if you really want to buy a car, now is a decent time to consider it.

Then again, with all the improvements to transport infrastructure (new MRT lines, ride-sharing, e-scooters, on-demand buses, EV renting, sheltered walkways, etc etc), you really should also consider the financial cost of car ownership and the added value that it brings to your life, and if that cost is worth it.

For me, at this point of time in my life, it is definitely not.

Perhaps in the future when my personal situation has changed and my financial position has improved, but that's a different problem for a different day.

Monday, January 14, 2019

Short Rant on Crypto TA + some decent Quant Research

One of the problems regarding crypto is that because it's so nascent, people are struggling to (1) understand wtf it is and (2) develop a logical framework to evaluate it.

You'll see that many people QUICKLY come to the conclusion that it is worthless because there is no valuation framework. *snorts*

Well, I can see why a lot of people have this misunderstanding. They are reading trashy clickbait news articles or reading sarcastic tweets by pseudo-anonymous twitter accounts (like mine).

Most of the "analysis" on cryptocurrency is unfortunately, technical analysis, and.... ba dum tss


Whoa whoa whoa whoa. Stop right there, chartist.

WHY do I say that TA in crypto is useless?

Well, firstly, there is no universal base. Unlike stocks, which are priced in the local currency that it trades on, cryptocurrency is traded against every fiat imaginable, as well as OTHER cryptocurrencies. Result? There are 100s of charts for the same asset. So if you think that TA works through self fulfilling prophecies, how can this be true if everyone is looking at different charts? Every indicator would be off-sync from another chart based in a different currency.

Next reason, and this is probably more important - except for the top few cryptocurrencies, majority of cryptocurrencies are trading on paper thin volumes. This means that a single person can pump in $10,000 and market buy to eat the orders in the order book and boom the crypto suddenly spikes a million or more in marketcap.

This is related to another point, which is fake volume. A lot of exchanges have fake volume, and a lot of the data aggregators just lift off the printed volume that exchanges claim that they are doing (but are not), and this screws up a lot of data.

Now, knowing that (1) there is no single chart that everyone uses, (2) volumes and order books are paper thin because (3) a lot of volume is actually faked, you can EASILY come to the conclusion that technical analysis in crypto is - at best - worthless.

And at worst? It's pure manipulation by "painters". These are people that pull up the most popular base currency charts that people are using, and just "paint" technical analysis patterns. They will "paint" a bullish pattern, let it emerge, AND THEN START DUMPING INTO THE VOLUME. And why do they do that? Well, I said it before, actual legit trading volume can be paper thin. They actually need to induce buying from other people so that they can sell. Of course, this also works vice versa if they want to buy - just paint a "bearish" pattern, and then start buying from people who THINK that it is going to dump.

Anyway, I just wanted to say how extremely worthless and trash technical analysis is for crypto. If you believe in it and it works for you? Great, continue what you do and power to you man. For other people, well, now you know why your TA doesn't work on crypto like how it works on other assets.

And that nicely brings me to the second part of my title: some decent quant research.

I actually just stumbled upon this myself. I gave it a good speed read and its of very good quality. For people looking for some actual logical ways to approach crypto, I think these 2 pieces by the same people are a very good start.

The first is "The State of Bitcoin", which makes the 360 degree long term case for Bitcoin with some short term analysis.

The second is "Bitcoin Holder Analysis Through Cycles", which is a more technical piece that links chain analysis with price history and mathematics to forecast how the future could play out. As long as you understand what are UTXOs you can give this a read, if not, you might want to understand that term first.

As a new asset class, a lot of people are still struggling to understand crypto. My personal take is that you really need to understand the fundamentals first. Just like how accounting makes for a fantastic base to start fundamental analysis for stocks, understanding cryptocurrencies, how they work and what about them is actually valuable is necessary knowledge to evaluate them fundamentally.

Of course, if you want to use astrology and meme lines to make financial decisions, it is also entirely up to you.