A happy new year to fellow bloggers and readers.
Covid has been with us since 2019, a long 2 years and still counting.
Financially, we are progressing well, and the returns are stable.
This year, our Singapore Stock Portfolio grows by 16.7%, outperforming STI ETF’s growth of 12.79%, by 3.91%
The end of 2021 marked a milestone of 7 years. At my target of 10% per annum, I should be looking at doubling my initial capital every 7.2 years, based on the rule of 72. Looking at my NAV of 1.841, I am still quite far from 2. Perhaps that should be my goal for 2022, to achieve an NAV of 2 by the end of 2022, I would need to aim for at least 8.63%.
That is the end of my 2021 financial reporting but not the end of the post yet. I continue to invest only in Singapore market, value investing style, guided mostly by the NCAV method.
Next, I am going to talk about my journey into the rabbit hole of Cryptocurrency.
Value investing, crypto, value investing, crypto, no matter how we look at it, these two do not belong together, much less in the same sentence. How can someone that believe in value investing, believe in crypto investing?
First and foremost let me say out what I feel about crypto right now after a few months of digging into it.
- Crypto and Blockchain technology are here to stay, but probably not the coins/token that we are buying right now, there is no value to start with and most will fall back to the value of zero, while some will get rich and some will get burnt in the process. We are very much reminded about the dot-com bubble in the 1990s, where every listed companies linked to IT get overvalued just based on their IT name or IT prospects, making people very rich, while there was no value at all. Or for people who can’t really relate to the dot-com bubble, in the recent Covid years, suddenly all sort of companies start branching out to gloves, masks, test kits, anything related to covid supplies, their stock price start flying through the roof without making a single cent from covid yet.
- There are a lot of money to be made in the crypto world, whether we like it or not, how absurd things are in that crypto world that we tried to push away, the returns are insane especially for the year 2021. Just for yields for your crypto deposit, no investing yet, you can get up to double digit. I learnt so much about value investing, and I work hard to screen for stocks, keep my greed in check and focus on what I think is logical and a realistic returns of 10%, the crypto world is giving easily close to 10% yield for stable coins(stable coins are coins with value pegged at $1 USD), so you have a fixed deposit that is giving so high, it changes many concepts that traditional finance has embraced so far. Where are all these yields coming from? What are the risks? How long can it last? Your guess is as good as mine. A lot of the investors whom are not good investors, suddenly they became Crypto Guru, easily doubling, tripling their capital all just in 1 year, this is never possible in traditional finance investing without any leverage.
- Third and last thoughts before I dive into my journey, this is what I feel is the most important and the deciding factor, for people who wish to go into crypto. I feel like Crypto is a very very big MLM scheme, one that put all the previous MLMs to shame, as this is a worldwide scheme, running 24/7, you have so much capital going into it everyday and from everywhere. It is just too big to ignore. All these yields, super high yields, what is sustaining them? It is the new capital that is pouring in every single day, and the music continue to play, please do not overstay. The new continue to pay for the old. So this is the question that i ask myself when I am thinking whether to go into crypto or not. Do I think for the year 2022, there will be a lot of money going into crypto or exiting from crypto? You can try asking yourself this question, if your answer is yes, then I think you should be able to earn money from crypto, even if you are just doing the fixed deposit at our local hodlnaut, 12% for USDT/USDC anyone? If you think there will be a lot of money flowing out of crypto, everyone is exiting, then first the yields will dry up, they will slowly revert back to what is realistically possible, more like the rates we see in the local stock market, bank etc. And that’s when the over stayer will get burnt real bad. All good things will come to an end, and for crypto, everything happens so fast and at best your view will only last for a short period of time, as it is everchanging.
Let’s talk about my journey so far. I want to be very very frank, it is greed, first and foremost. There is no where you can get such high returns, never in traditional finance investing. I put in a small amount of money, this is separated from my stock investing, At best it is considered a side income, money that i am prepared to lose it all, and money that I would take out instantly if I can double my capital. I want to be very truthful, and I hope everyone can be truthful to themselves too. This crypto gains, will not last long, so the risky mentality of go big or go home, cannot be permanent, we are reminded by some of the biggest lottery winners in history, their fate does not ends well. Money comes, money goes, but mentality are here to stay. While I am willing to take more risks in crypto, it does not applies to my stock portfolio, which target is still 10% per annum, and the money are for retirement. A lot of crypto investors got a big windfall in 2021, they talked about their losses, the situation which got away because they are not aggressive enough, because their conviction is not strong enough. In a bull crypto market, the more aggressive you are, the better your returns will be for most situation, but if you applied the same mentality to a prolonged bear market, you gains will be swiped out, and if you leveraged, your situation is going to be very bad. In crypto, we are mainly chasing after yields, there is no logic, and no calculation that can be made to calculate the value of what you are buying, the value most often than not is zero.
So, what are some of my observations so far for people who are interested in getting into crypto too.
- There are a lot of inefficiencies in the crypto world. You want to invest in a particular coin/token, you have to know the network it is on, buying that particular coin and transferring to that particular network is not that straightforward. I cannot tell you how many account I have created with different exchanges, and the number of wallets I have created, just to buy, transfer and hold that particular coin in my wallet. X exchange sell this coin, after purchasing when i wanted to withdraw, I realised it was only for that particular network, and it was not suitable for me, as I need it in another network to do staking or swapping.
- Ethereum network has very very high gas fees, gas fees are the transaction fees, so everyone is more or less avoiding transferring on the Ethereum network, but yet a lot of stuffs are build on the Ethereum network, it is all linked! Once you hold crypto in Ethereum network wallet, you would need to pay double digit figures just to get it back on the exchange to trade or sell, this is really high for someone starting out with few hundreds or thousands.
- You need to be a problem solver, it is a lot harder to invest in crypto than traditional finance platform, there are many ways and many website that can help you achieve what you want, ultimately, you have to choose the way that suits you or that with the lowest gas fees. Avoiding Ethereum network is important to me, but that sometimes means I have to go through many steps to get the coins/token that I want.
- My style~ I start with fiat deposit into my Gemini account, as I have it linked to my bank account for deposit or withdrawal in either SGD or USD, then from there we get 10 free withdrawal every month, the withdrawal fees is why we need to have account with so many different exchanges. I created one account with crypto.com just for Matic withdrawal in Polygon network, there are some swap websites that can do that, but you would need matic in your wallet first for gas fees which defeat the purpose, previously you could get free Matic from faucet to kickstart your journey, but after Polygon raise their gas fees, everything stops, i really dislike creating so many accounts just to get the coins/tokens i want, you just have to keep going and going until you find the right solution, it is very time consuming, a few days sometime before I can get the coins I want in the right place. FTX exchange is good, as their withdrawal are mostly free, except for ERC20 coins, which can be free if you download their FTX mobile and do the withdrawal from there, the exchange website and the mobile app are 2 separate accounts, it can be troublesome and frustrating for new crypto investors. When you are doing transferring or withdrawal, you have to check different exchange withdrawal fees, and whether they can transfer in that particular network you want, again there are a lot of inefficiencies. You need a Wallet for Terra(Luna), then you need a Wallet for Ethereum, I am using Metamask, it is cross platform and the one that I used most often, but it does not cover all networks, so I still need to have other wallet for other network. Swap website are useful when you need to swap coins, but do not wish to create more accounts, for different network, there are different website again! Pancakeswap for Binance, Pangolin for Avax, Uniswap, and a lot of others, i used them quite often for staking.
For someone that is doing value investing, going into crypto, goes against what I stand for in investing, there must be a value, I go through financial reports, calculate their net current asset value, their profits, their cash vs debt etc, just to get an understanding of their value. In crypto, there is a lot of feel good mentality, chasing after yields, and just getting into any ICO, IDO, IEO, IDE, and cashing out immediately after the locking period, flipping a few times of your capital, irregardless of what the actual product is all about. It is all about decentralising. There is beauty in it, I must admit, with no power and high social status, one can never have the opportunity to invest in such high gains projects, when you are dealing with big corporations or government, the word is proven. It does not matters whether you think you are good or not, or whether you are good or not, the criteria is proven, if you are an angel investor, you are proven to have the resources or the capabilities, regardless of whether you are a good investor or not. In crypto all this does not matters. It is decentralised
I am late into the game as usual, as I am always skeptical. While I just got into crypto, this year is about NFTs, games, and the virtual world properties, crypto currencies is already hard for me, again what is the value of all these currencies that I am purchasing? And now everyone is going crazy on all the stuffs that I really feel is worthless. Maybe I will change my mind on them few months later, I do not mind being late at all.
Right now, please excuse me as I get ready to register for my first crypto IDE. Hopefully I will have something good to talk about for my next post in the near future.