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.