I had a thought the other day about what investment will be my best over the next five years. If I was to forget about it all and come back years down the road would crypto be dead or makeup 5% of the Forex market. I’m what is known as a ‘Hodler’ so I don’t ever trade but I do pound the table when discounts happen.
We are seeing a great discount right now in prices which I love. I start scooping up assets by the hundreds in tokens because my risk is smaller than buying at the top. So let me get to what tokens will succeed…
My favorite investment by far is Ethereum which makes up the bulk of my portfolio. For some other people, it is Bitcoin but those two cryptos are the least volatile. The reason is they have more support and money trading in comparison to a random ICO. I look at address growth everyday on Etherscan and that confirms to me that the Ethereum blockchain will be huge. Additionally, new coins are being built as ERC20 which show support for Ethereum.
Another prospect I started buying at $6 was OmiseGo. I wish I would have loaded the boat more than I did at the time but it was when I was just starting to dip my feet into other assets than Ethereum. I will also get the airdrop money because I owned Ethereum when the block happened.
I think it is important to have some money in your portfolio go toward an asset that has a debit card behind it. This is really the future because it allows people to spend the crypto they accumulate. My choice was to buy TenX because I like their iphone app so far and the team is strong. But there is other choices which include Monero or Monaco. I choose TenX over these two because they are positioned better and have a huge card company working with them. They haven’t revealed the name but it looks promising.
Now remember that the nature of crypto will probably make your stomach twist and turn day to day. It is not an easy industry to be in but nothing is when it is just starting out. The reason you will stick out the hard falls is because you know that there is more value in the asset than any short term thinker can see. If you stay with it you will be one of few that actually makes it long term.
Many people ask me why I don’t short on these pullbacks and the answer is because its absurd. Why would you short an asset that has value long term? It has skew to the upside and can go down near term but eventually shorts will get caught off guard by a huge squeeze. They will only get burned out of the market over time.
I learned this lesson the hard way in the stock market. I went short the market with all I had in 2015 and it worked for awhile until it didn’t. So now I just hold and average down when I see discounts. By doing this, I have made way more than I could have imagined any other way.
I know many of you have heard the line “the party is just getting started”. You normally say it when something great is still in its beginning stages. Well, big investors across the board have been on the side lines for awhile now when it comes to crypto. Though, over the last few months I have seen a different trend take place.
When I watch CNBC, the traders are starting to dip their feet into these technologies. I think finally after watching price skyrocket they feel the need to get in the market. I mean who wants to miss out on potential waterfall gains.
Even Goldman Sach’s has recently warned investors not to ignore Bitcoin any longer. This is a huge step in the right direction and the CBOE even has been working to offer trading for Bitcoin futures. I think this is just the beginning and the start of a new era.
This new era will take time but in the next couple of years big money will pour into the crypto space. Right now the crypto space has largely been funded by individual investors and not institutions. How much money do I foresee coming into the space? A fair statement would be to see roughly a trillion dollars enter crypto in 2018.
You as a reader of this article most likely know more than institutions about crypto currently. To that, I say ‘cheers’ because this is the beginning of the largest technological advancement we have seen since the internet. I believe it can stretch far beyond the capabilities of the internet.
Speed, security, and power is what people will have with their money and that is game-changing. Most people I talk to don’t have a clue what it could do for the world. But then again they are 91% and you are the 9% in this transfer of wealth that will occur.
The story of Ethereum begins with understanding the technology. Many have gone out to buy Ethereum just to make a quick buck and they will be the first to have the carpet ripped out from under them. If you don’t understand the technology you should stop here and never put a dime in it.
The price of Ethereum will continue to go up over time as a function of mass adoption. I foresee a big move occurring when integration of the blockchain comes to mobile phones in a big way (TenX). It will allow even a grandma with little technical expertise to access her finances.
However, mass adoption doesn’t occur overnight and you need to be patient. A few things I have been watching will work in it’s favor including the sharp move lower in the dollar and the stock market. Additionally, when Proof of Stake occurs many of the big investors will start to have a seat at the table.
The stock market has hit all time highs on the year but is starting to correct. The value seems to already be sucked out and the growth seems small in the future. I could be wrong but it isn’t where i’m putting my money.
The next asset on the list after stocks is usually the dollar which has taken a bath this year. Currently, it is down over 8% and doesn’t seem like a place for investors to put their money. The yield of the dollar is small and the risk is huge right now.
After a long enough period, people start to question the system. This is why we see so much money flowing into crypto. But not just for decentralization from a system built on hierarchy.
Ethereum and other cryptocurrencies offer a few meaningful qualities that people love. They offer a secure medium of exchange with no oversight by government. Beyond that, crypto is acting as a means of digital gold right now. The supply can’t be printed off to oblivion like the U.S. dollar.
In the future, the activity between nodes all across the world to verify trust in transacting with each other will become a reality. Everything we do from day to day will be done over the blockchain. Instead of the spam that clutters the web now we will have a system that is more useful and faster than ever.
In my years of investing, one of the most powerful things I have learned is ‘correlation’. If you set a portfolio right using this phenomenon you will considerably bring down your risk profile.
What does it mean?
Correlation begins with the simple concept of everything in the world being measured against 1. The closer the value to 1 the more correlated the asset classes are.
For example, the stock market and Ethereum are negatively correlated so they are good for a portfolio. As one goes down, it doesn’t mean that the latter has to go down.
We saw this take affect already this week when the S&P 500 was down 1.45% and Ethereum was actually up a little bit. Here is a side by side comparison of the charts.
Now the way I play my portfolio is to have the money my company gives me go into the stock market while the rest goes into crypto.
I have a strong belief in the the idea of playing undervalued markets and crypto seems to be in its beginning stages still from a valuation perspective.
It will only be a matter of time before more whales of the industry start to get an itch for crypto. The price valuation will go up over time because more people will be using the network as it moves toward mass adoption.