Since people only care when prices are up (like now) we’ll go ahead and change everything we said in the past. Just kidding. Nothing has really changed from Triangle Investing. We’ve already mentioned we *stopped adding* to our stock portfolio at the end of 2018 and for 2019 we’re investing in the other two legs of the “triangle”. Unfortunately, since most people don’t have much money they assume when you “don’t invest” that you somehow sold (which isn’t true). Rich people can diversify by simply investing more into other vehicles while pausing investments in one or two vehicles. All of that aside, lets jump in.
Dollar Cost Average: We’re using the same strategy we used for stocks since 2012. Every month, buy the exact same amount and never sell. This means you end up buying highs sometimes and you end up buying the lows as well. If you’ve done this correctly you’re buying “forever”. This means you’re investing an amount that is meaningless to you for your day to day living. Meaningless to you could be $500, $5,000 or $20,000+. The dollar amount isn’t relevant. What is relevant is the strategy of consistent buying without selling. Keep it Simple Stupid! Or as we say Keep it Stupid, which means the strategy needs to be dumb enough to work for low IQ people as well.
Dollar Cost Bitcoin Example: While we have an S&P example in the prior link above, we’ll do another one for Bitcoin as well. Since your average person doesn’t know how math works, they assume people lost money and all bought at the top (this is mathematically impossible with dollar cost averaging). So lets say you decided to buy $5,000 worth of Bitcoin per month. Also. We will start at the end of 2017 at near peak prices. This would lead to the following:
Dec-17: $13,791 = 0.36BTC; Jan-18: $10,058 = 0.49BTC, Feb-18: $10,486 = 0.48BTC; Mar-18: $6,963 = 0.72BTC; Apr-18: $9,213 = 0.54BTC; May-18: $7,550= 0.66BTC; Jun-18: $6,377 = 0.78BTC; Jul-18: $8,139 = 0.61BTC, Aug-18: $6,995 = 0.71BTC; Sept-18: $6,598 = 0.76BTC; Oct-18: $6,325 = 0.79BTC; Nov-18: $4,013 = 1.25BTC; Dec-18: $3,892 = 1.28BTC; Jan-19: $3,468 = 1.44BTC; Feb-19: $3,867 = 1.29BTC; Mar-19: $4,110 = 1.22BTC; Apr-19: $5,308 = 0.94BTC; May-19: $8,747 = 0.57BTC.
There you have it, after starting at practically the top you spent a total of $90,000 and accumulated 14.89BTC. While the price might fluctuate incredibly, at the time of this writing it sits at $10,700. This means you spent $90,000 and now have $159,323 or a 77% return.
We can’t emphasize enough. This is assuming you only invested $5,000 a month and it also assumes you started at one of the worst possible times (end of 2017). So. You can quickly see that the people who lost money investing in this space were essentially speculators. Attempting to time the market with no knowledge and didn’t bother buying when everyone was selling. Buying when people are calling the industry dead is usually the smart move. As a fun note, we sold a product at the peak of the hype by “coincidence” = ). Sell picks and shovels in manias.
Updated Coins: For fun we’ll give away the update for free. Why? Well nothing has changed at all. Still looking at the exact same ones. Sure some are down, some are up but the strategy should work over the long-term and on balance (as mentioned in the book) only a few will survive. That said. The ones that survive will be worth a ton. If we end up investing in other ones we’ll provide an update in the section mentioned in the book. To put a bow on this, zCash and Blockstack are two we are currently looking into.
Basic Summary of Why We are Involved: We never really gave the regular blog a good explanation so this is a good time for it. We’ve been involved for quite some time, with older readers remembering more aggressiveness back in 2015. Now here is the main reason why we think everyone should own some of it.
You’re entirely free to transact. This means there is absolutely no way to stop decentralized crypto currencies from completing a transaction. If you want to send $100 worth of Bitcoin for example to your friend, no one can say “no”. You could do it as long as the internet is up and running. Pretty simple. There is no other asset that offers this property.
Limited Supply. Unlike Gold where more gold is pulled out of the ground from the prior year, there is a factual limit to many of the currencies (not all of them) with trackable inflation rates for the other ones. No other currency is like this since we have no idea how many dollars are in the world.
Privacy. If you don’t give away your address to anyone, then it is not possible to know who you are. This is even more so with privacy based crypto currencies. Privacy coins make all transactions private (unsurprising given the definition). There is nothing like this in the world. The best we have is physical transactions but even then the person has to see you face to face. All electronic money transfers outside of crypto go through a third party and can be tracked.
Speed. For anyone following the space, making transactions is becoming incredibly fast. In fact if you’re involved you know that you can send tens of thousands of dollars within seconds at next to no costs. This is incredibly valuable. Just imagine paying someone’s dinner bill while you’re in another country. All you need is their QR code to pay the bill and you can hook them up from New York while they are eating in Moscow.
Cheap. While it used to cost a lot to send a transaction, this issue has largely been solved. If you have the latest and greatest technology on your computer and phone it costs pennies to send tens of thousands of dollars. There is just no way to do this so seamlessly. In fact, if you move more than $10,000 with any normal bank this is going to be flagged and the transaction might be stopped while you are grilled about the movement of the money in the first place.
Avoiding Scams: Unsurprisingly, we’ve avoided the scam coins. Many of them have gone to zero as expected with the natural wash out (similar to the original internet bubble). We think the scam tokens and ICOs will begin again at some time but we won’t be involved. Unless we get a chance to really figure it out, we’re happy to wait until its in the top 50 or so before bothering with the research. No need to play hero and try to get the exact starting point of every single coin.
No change: Sometimes the stupid easy strategy is the hardest to execute. It isn’t mentally easy to hold through down turns and keep buying. Also. It isn’t easy to keep your emotions in check when the prices suddenly go up. This is great news for anyone involved in the space. It means you’re going to do perfectly fine by buying every month and having an auto-pilot investment strategy. To cap it off, we already stated we think it could go down a bit near-term since it moved up so much. But. We won’t change our strategy at all.
That’s it from us and we’ll have the normal post go up later this week.
I’m thinking of DCA then doing partial sells.
I know this isn’t a Q&A but if you plan to never sell, even at a 50% return with DCA, or do you plan to partially dump some once certain cryptos exceed certain price points.
You could get access to all those benefits of crypto such as speed,privacy etc by just buying when you need it, without hodling.
Because with hodling index funds or dividend stocks etc, you recieve income whilst hodling but crypto you don’t, so I’m curious as to how you’re going to directly profit from this in fiat or do you not intend to.
Thanks
It says right there we don’t plan on ever selling anything we buy as of now
You”ll sell when it drops below 50%.
Trust me.
Nope.
How does the impending launch of Facebook’s Libra (a quasi-reserve currency) affect your outlook on the crypto space and more importantly the long-term health of the USD if at all?
Not a Q&A.
That said answer is in this post, doesn’t
matter at all.
I’m guessing if Libra launches, it will supercharge the rest of the space, despite all the doomers moaning it’s censorship coin. Look how much tether created the last bubble.
So first off – I’ve been a long time reader of this blog, first time commenting ever. You guys are great! Really helped a young guy from NYC make all the right decisions. Efficiency and Triangle Investing were great reads. (Made me sound well informed around wealthy/intelligent crowd and like an know it all dickhead to others ha!)
Anyway – This is all spot on. I’ve been accruing cryptocurrencies since end of 2016 and kept right on accumulating through the “crash”. The same colleagues, friends, family, etc that were asking for my advice and help were the same ones making snide comments during the downturn and are – surprise – the same ones asking me for price predictions now.
el oh el… I just work on my business, collect sales checks, and invest in high growth markets (Can handle risk)
Really looking forward to an awesome next few years guys! Thanks for everything.
PS: You guys mentioned privacy currencies – so I’m assuming you understand the different layers that make a currency “private” zCash is definitely doing more than some of these parlor trick privacy currency coins – still, super interested in what you guys have to say about some of the others. Also only Top 50?!lol
Hahaha awesome! Glad it worked.
Going through a couple up and down cycles forces “life’s losers” to show their cards.
Ever tried day trading alt coins?
No
For this strategy to work the underlying assumption is that the *expected* value of crypto is going to be higher in the mid- to long-term.
May I ask why you are so sure about this?
(Feel free not to answer If explained in Triangle)
Explained in book.
Thanks for the numbers on DCAing, I know a few people who did it and people were laughing at them (I bought in the last couple months and am up 60%, but have less in than if I had DCA’d).
I like your comments on switching new money allocation to other asset classes. Do you DRIP your dividends in your equity positions or take the cash and reallocate?
Read both Triangle Investing & Efficiency. Great reads!
It was crystal clear dca into everything.
Hello WSP.
I just wanted to thank you. Your content created a sense of urgency and I have taken steps to leverage what I have in order to create a future for myself.
Reading your books, truly, made me realize the following:
– From career perspective 100K a year truly is a small amount compared to the options that are out there provided I work hard and make the right choices
– I have WAY less time than I thought I have (23 years old)
– 1-5 million in 10-15 years is very achievable even if I am not the smartest person
– My skills are in synthesis and intent. Synthesis I realised from being good at “systems thinking” in work tasks and school related to IT, industry analysis and process optimisation and I always feel like I predict people’s behaviour correctly based on intuition. This means that I should go into Private Equity.
Here is a number of actions I have taken since reading your book:
– Been recruited by an operations optimisation agency, due to a combination of GPA (4/4) and work experience, where my results (KPIs) are strictly measured (good for CV) and I am paid according to performance (working career instead of job). Furthermore, I have the potential to make partner with equity % within next 2-3 years while I am finishing my graduate. This is good as it will teach me sales, give me a huge amount of responsibility at an early age and I might achieve an event post-graduate when I change career and sell co-ownership
– Networked with an influential guy my family knows, who has held C-level roles in multiple IB firms. He was impressed and is willing to open doors for me to get hired at MBB post-graduate which I already plan to leverage in order to exit into private equity when MBB salary starts to plateau.
– I own a fully renovated apartment with 0% interest mortgage in a fast developing urban area that I rent out to same-age acquaintances to pay off the loan and sell for a profit in 10 years to generate an event. It’s 0% because I could borrow money from family inheritance (parents are regular people who retire at +/- 65).
– Education in my country is free so I have no student debt.
Career is taken care of now provided that I keep performing, maintain a +3.5 GPA, do some electives in corporate finance & accounting, stay in soft-touch contact with mentor/family-friend and master the politics game. A first significant event is guaranteed through selling my apartment in (depending on rent levels) 8 – 12 years.
Next step is mastering online sales and then Flippa when I know my core competency, learning to waste less time (e.g. hungover from bad drinking habits when out) and getting into even better shape.
Thank you WSP.
Hopefully yall cover the topic of avoiding hate.
After I did a wardrobe change on based on your “Dressing Sharp”
posthttp://wallstreetplayboys.com/dressing-sharp-ignore-what-people-say-go-by-the-results/
I have gotten considerable resistance from people, friends, family..etc. About to revert back to stealth.
Your fit, stylish, debt free, and have some cash causes ego death to 99% of the population god I hope the relationships can be rebuilt. They’re pushing me away. Lol
Nope ditch them
Quick question on DCA. I have a very large cash position due to success in business and for various reasons I cannot invest that back into my business to scale it fast enough.
Ideally, I do not want to lose this money. I am investing back into 60/40 asset allocation at a rate of $30k a month, however, I have $1m in cash and growing at $50k a month. Should I invest at a faster pace? I am concerned about high valuations (like everyone) but have the opportunity cost of losing 3% a year on the cash pile to inflation.
Would you just invest it as a lump sum or continue to DCA with my relatively safe allocation? I know, good problem to have!
Not a q&a
“How to Invest a Lump Sum” from Of Dollars and Data.
https://ofdollarsanddata.com/how-to-invest-a-lump-sum/
tl;dr: invest the lump sum asap. If you want the maths and the why then click the link.
Crypto isn’t magic. It’s just an asset class, and usual investment rules apply. Zig when others zag. Went heavily into Chainlink (LINK) at the 0.30 range after the Dec 2017 crash when everyone was freaking out, since I liked the potential of the technology for smart contracts, which I think could be a killer app for ETH. Well, turned out alright just holding. Probably going to sell when the barista at Starbucks asks me what I think about crypto.