Monday, July 24, 2017

When the Obvious is not really that Obvious

 I was just browsing the interwebs lately and I stumbled upon this interesting quote:

Talent is hitting a target that no one else can hit.

Genius is hitting a target that no one else can see.

Now, that got me thinking.

I have quite a lot of smart friends. In fact, I feel that compared to some of them, they are operating on a whole different level of intelligence and brain processing speed. Like seriously.

I could understand each individual action. I could also understand how the sequence of each action relates to the other actions.

However, what I couldn't understand was how he was executing actions, updating the sequences, and re-calibrating all in real-time to optimize the output. What looked like a problem that would require of me at least minutes, if not hours of thought, was being done by him as just another everyday thought process and action, almost effortlessly. It was unreal. But it was real.

I had always thought of myself as a smart person, but after this experience that I had in university, I realized that there are plenty of people that exist in this world who are way smarter than me, operating on a whole different level.

I would never be about to beat these people outright. They could get things done faster and better than me. How could I beat someone with such talent? And most of them also have more resources too.

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Ever since I became a gold bug a few years ago, I have struggled to understand why no one else can see what I see.

Am I wrong? Delusional? Is this really stupid? Am I dumb or something? 

But what I have come to realize is that nobody bothers to even look at it to form an opinion for themselves.

To reach the conclusion doesn't require years of studying. Probably just a few weeks at most, or within a day if you realize the importance and urgency of such knowledge and hit the most important points first and work your way down. If anybody bothered to take a look and understand it for themselves, the conclusion is blatantly obvious. Slap-in-your-face obvious. But no one looks and no one cares.

The global monetary system is broken. Period. Any argument defending that always precipitates to "the government won't allow it". You know, kind of like how the French government didn't allow the revolution.

Oh wait, hold on. Nobody gave a shit about that government? They all got beheaded? Oh yeah. Well, I guess you can trust every government except the French government then. /sarc

My point: If your only argument is "faith" in your government, or worse, in the governments of other countries, then that is not a very strong argument, in my humble opinion.

As long as this shell/shill game continues and fiat money is still useful as a currency, I will keep on playing this game. What am I to do? Buy food at the hawker centre with silver coins? 

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After stumbling back into cryptos for the 3rd time, it finally stuck with me this time.

A system that not only operates on distrusts, but is stronger and more robust when people distrust each other. Every distrust requires more proof and verification and it makes the system that much stronger and tamper proof.

A system that is so distributed that no single party can exert authority on the rest of the participants. 

A system where holding nothing means you hold nothing, holding part of the system gives you utility, but holding everything makes it worthless. Where value comes from distribution and usage, not from hoarding and scarcity. What's the point of money if no one has else has it or is willing to use it as a medium of exchange?

It is a system that survives on mutual distrust and decentralization. Where all the players agree to be bounded by certain rules.

Not happy? Want to create your own rules? Fork from bitcoin and make AnyhowCoin. But unless you get other participants to join your game and agree by your rules, it is worthless.

Cryptos can survive because people have decided that they rather be bounded by these fixed rules, rather than the ever changing goalposts and standards set up by governments and central banks that could turn on a dime. 

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Things are slowly changing. You CAN buy goods and services with precious metals. You also CAN purchase things with cryptocurrencies as well. Technology has bridged the gap to make these kind of things possible.

There are a few companies that issue precious metals backed debit cards (not credit). There are now a variety of companies coming up with ways to have crypto-backed debit cards as well. I've mentioned TenX before, but there is also Monaco, Tokencard, Metal and Plutus. 

The next possible big thing is paying with precious-metals backed cryptocurrencies through debit cards. It sounds almost ridiculous to say, but I believe that this mix and the final outcome is a better solution to fiat money.

A lot of people are confused and skeptical by gold-backed crypto or currency. Yet they don't see the hypocrisy of faith-backed fiat.

Of the few things that I can realistically see happening in the near future, a gigantic financial shit storm regarding the reduced value of government and faith-backed money and a need to find a better currency is something that I am quite certain of.

It is definitely not going to be a single moment where people just flip on a switch and everyone starts using the new system. It will happen in waves, as more and more people realize that having big stacks of monopoly money doesn't mean much.

People should not be forced to use shitty money where some unknown party can expand or contract the money supply with no oversight and no punishment. We're basically ending the beta testing phase of this new form of money soon, with 0.01% of the world's population already giving it a go for the past 9 years. 

Of course, the people who dared to get in early will be the ones who benefit the most. Fortune favours the brave, not the risk-adverse. The early adopters, not the herd of sheep. The hardworking who bother to learn, to understand and to try and to fail, not the lazy who want to be spoon-fed a the perfect, bug-free, government-approved product that is "safe" for all.

The fundamental movement into crypto is not a f-you to the government merely because it is a government. It is an f-you to any and every government for being shitty fiduciaries of people's money.

If they can't do it properly, then the people will.

But fine, I'll play this game as long as fiat money is worth something. It is not my preferred choice, but that's the best course of action at this point of time. I already have my exit strategies all planned out.

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Now back to my story about all those super intelligent people that I've met. To big banks with prop trading departments and millions of dollars of that their disposal. To hedge funds with insider connections. To everyone smarter than me and with more resources than me.

I don't have to beat them by competing with them to hit their targets.

I get to beat them by hitting the target that they didn't even bother to look for or understand.

Yes I realize that it seems like I am implying that I am a genius, but I can assure you that I am not. I am just a lot more skeptical and contrarian than most. So far, that has been my only edge in the market and it has served me well. This is just the extended application of it outside the tiny world of SGX stocks.

Disclaimer, in case it was not obvious enough, I have positions in both precious metals and cryptocurrencies. Why both? Well, why not?

Thursday, July 20, 2017

Why do I not invest with robo-advisors

By the way, I was inspired by this post from Finance Smiths.

Wow, shocking title, isn't it?

From the same shill that peddled why robos are so awesome? What has changed? Why the sell out?

Let me assure you, it has nothing to do with robos themselves per se. I have been watching both Smartly and StashAway come to market (StashAway is doing a way better job at marketing and acquisition imo).

I think both of them look great and it is definitely a step-up from the shitty offers that traditional financial institutes offer.

And I still stand by my entire article that robos are excellent.

But.

But what?

But I think the timing is off. The product is great, but the timing is off.

I know that DCA is supposed to remove time from the equation, but for me diversifying and deploying capital into the markets even through a smart way like robos is still not good enough for me.

Perhaps it is because I am in the camp that every single freaking thing is bloody expensive, or because I walk around with a tinfoil hat warning about financial armegeddon, but I really don't think that anything in particular is a good buy.

And this isn't me just being contrarian for fun. This is me looking at the context of where asset prices are and what are the risks and rewards in all these trades.

Unfortunately, I don't really see much upside to almost anything.

Pfft, even with my pretty decent track record (my SGX portfolio's money weighted return has outperfomed the STI by almost 7.85% in absolute returns, and yes I included the dividends), I am very suspect about the future returns of a lot of stocks in Singapore.

So pray tell, what does GMGH invest in then?

Honestly?

Plenty of cash. This is my war chest to help relieve desperate sellers of firesale assets, hopefully sometime in the near future. Over-exposed to risk assets? We might trade in the future!

Gold, silver and cryptos. These are my low-beta investments, invested on the basis that they are going to be worth a lot, a lot more in the future. Sure, they have no cash flow. But hey, I heard people can flip Taylor Swift tickets for some good profits. Next greater fool theory still, isn't it? My time horizon just happens to be longer and the asset that I'm hoarding is different.

Sometimes I wonder why I've wandered so far out to the fringes. But once you've seen the Matrix, you know just how deep the rabbit hole goes.

Tuesday, July 18, 2017

$7,600,000 Crypto Scammed

I was out tonight when I read that the CoinDash ICO got hijacked and scammers managed to switch the real address with their fake address.

The result? $7.6m scammed over 3 hours.

Well done. Very well done, I must say.

Instead of launching scam coins and sham ICOs, I think a lot of scammers and hackers have realized that it is just more profitable to outright scam people.

Why come up with a huge elaborate ICO scam idea when simple scams work out so well?

Creating fake twitter accounts and slack accounts with admin-sounding names are all free too.

I think the loophole of slackbots and slack DMs were also quite effective.

After watching the evolution of scamming go, I really have to say that this takes the cake.

What these hackers did was freaking ingenius.

1) They managed to access the website
2) They posted their own address instead of the real address during the actual start of the ICO

Boom.

$7.6m worth of Ethereum in the bank.

Honestly, it was a very smart scam because they took full advantage of the FOMO and rush of a popular ICO and just did a simple switch.

Unlike other silly ICOs that got compromised whose hackers tried to "launch early" and basically gave away that they were compromised, this tactic managed to trick a lot a lot of people.

They did not make the mistake of showing their hand too quickly.

I believe that this really sets the precedence for best practices for future ICOs. Part of the actual ICO address should be released beforehand. The address should be resolved to an ENS name which is also publicly known to have been legitimately acquired beforehand. Also, the address should be published slightly before the start of the ICO, so people can quickly look through the code and also verify the address. Finally, the smart contract should just be able to bounce all incoming early transactions.

To those points, I must say that TenX that launched last month did a perfect play that effectively would have rendered a similar hacking situation like this to not even be able to go through.

For hopeful ICO participants, I have some tips to share. Why trust me? I've successfully taken part in more than 1 ICO. Have you?

Tip #1: Only send from wallets which you own the private key. Don't have one? Generate one at myetherwallet. It's free and it takes like 2 minutes.

Tip #2: Double and triple check the ICO details and address from a few of their official channels: website, twitter, facebook, reddit, youtube, slack.

Tip #3: Etherscan an address before you send to it

Tip #4: Don't set gas limit too low, transaction will fail

Tip #5: Don't set gas price too low, transaction might take a very, very low time to go through

With these 5 tips, I hope that you guys can stay safe and will be able to participate in future ICOs safely and successfully.

Remember, Ethereum itself launched as an ICO for $0.30 an ETH. Even after ridiculous declines in recent weeks, it is still worth $175 (at time of writing). 500+ times returns investment? You tell me a stock that can give you that over the past few years and I will clap for you. In case my point flew over your head, "all ICOs are scams" is not a true statement.

Stay safe, remember, cryptos is the wild wild west. Anything goes. Like making away with $7.6m.

Sunday, July 16, 2017

Weekend Crypto Bloodbath Aftermath


Bitcoin went down 20% just this weekend.
Ethereum went down 35% during the same time too.

I hope you managed to bunker down and dodge the massive shit storm in the crypto markets that happened over the weekend.


Well, you really can't say that I didn't warn you, right?

I mean, I even had a full length blog post with Hyuna bouncing around singing "Bubble Pop". If that wasn't enough, frankly, nothing would be.

 aiguuu, y u no listen to oppa GMGH~?

Bitcoin went down a whooping 40% from its high.
Ethereum, the new kid on the block, went down a massive 70%.

The entire crypto market is now at a more sane 60b instead of the 110b that it was at. This pretty much means that almost everything has had it's value cut by about half. (Didn't I say "60b" just a few days ago? Damn son, that's some good levels I've got targetted.)

I hope anyone heavily gambling on cryptos on margin was wearing pampers when they saw it crashing over the weekend. Cos they would've definitely shit their pants. Leverage with cryptos is a very, very bad idea. (pro tip #4)

That said, my crypto portfolio has finally turned negative. *booooooooooooo*

However, you know what they say about blood on the streets right?

Buy when there's blood on the streets, even when some of that blood is yours.


Personally, I don't invest in cryptocurrencies to flip them for a quick buck. I know many people do, and that has been a very, very profitable strategy.... until the last month.

I'm invested because I believe that cryptos are going to be a large part of the future, whether or not you care about the economics of it. Just the technological possibilities it opens and businesses that it disrupts is good reason enough. Add the fact that they can and are be used as an alternative currency, untainted by profit-hungry banks (can't blame them, but can't say that I like them either), shitty governments and stupid central banks and you've got 2 birds with 1 stone.

I honestly wouldn't be able to tell you if cryptos will be bottoming in the next month or so and if we take off from there (which we very well could, once we shake out all those weak hands), but alas what I hope for has nothing to do with the outcome in reality.

If cryptos drop another 50% from here, you can be rest assured that I will be buying even MORE.

For those who have reached maximum allocation, all I can say is to make sure that you aren't holding some shitcoin. As long as you've got something somewhat decent, once the killings are done and the recovery starts to happen, your coins would be the ones taking part in the recovery, not staying at zero valuation.

If you guys are here, you should know that huge market sell offs are a time to be buying, not selling. As a gentle reminder, the ONLY way to make money is to buy low and sell high.

Stay safe guys, it's crazy out there.

Thursday, July 13, 2017

Things you REALLY need to know before buying Cryptocurrencies

This post is inspired by the IG-sponsored post on D&S.

1. You own the underlying asset when you trade

When you buy cryptocurrencies, once the coins are in a wallet which you have the private key to, you are the owner of the coins.

2. There is no counterparty

Unless you are leaving your coins within a centralized exchange to make trades, all the coins that you can access with your private key are yours and you don't have any counterparty. You directly interact with the blockchain to send your coins, or receive more coins directly to your ownership

3. There will be volatility

In a market with plenty of speculators, the volatility is high. Even for the "large cap" coins, it isn't strange to see swings of 20% within a day.

4. Don't use leverage

Related to #3, with the huge amount of volatility in the cryptomarkets, you don't need to use leverage. With a leverage ratio of 5:1, a 20% move is all it would take to wipe out your account.

5. Know your fees

There are a bevy of fees everywhere in crypto. There is the exchange rate "fee" for pricing the coins in a specific currency, there are exchange fees for using the exchange. There are payment processing fees for different types of payments. There are withdrawal / transfer fees for moving the coins out of exchanges. There are also transfer fees when moving coins to different wallets. There are deposit fees when sending coins to be traded on exchanges. There are exchange fees on those coin exchanges as well.

The good news is that there are plenty of people offering a wide range of fees. It is possible to buy coins and have them in your private wallet for less than 1%, after taking into consideration all the fees involved. It varies widely, so be careful.

6. Ownership has possible benefits (and downsides)

Some coins generate interest for owners. Most coins just sit around and do nothing. A rare minority of coins have a holding cost. Understand the benefits of having ownership of coins and what you would have to do to make them work for you.

7. After the fiat conversion portion, there are almost no regulations

From the point that you have coins transferred out of an exchange, you are on your own. There are no regulations. The decentralized nature of most blockchains make them extremely hard to be regulated.

8. You are trading a currency that is immune to central bank's policy

No country or central bank control's cryptocurrencies (unless they make one themselves), so they cannot influence how it works. This gives transparency and consistency to cryptos.

9. Risk management is key

With such crazy volatility and new technology, there are bound to be failures. Don't risk more than you can afford.

My 2 cents:

If you are buying because of the hype, the fear of missing out and stupid ads and articles saying "If you had bought $5 of Bitcoin 5 years ago you would have $5 million", you should definitely NOT be buying any cryptocurrencies.

However, if you:
1) Understand the technology and how it works
2) Understand why a particular crypto can be successful
3) Have money that you are prepared to lose

then, by all means, welcome to the wild wild west.