BITCOIN

Aegis

Is this a brag?

S&P500 2021: 28.8%
NASDAQ 2021: 23.2%

Congratulations you lost out to the market.

Hell, even the FTSE did 12.4% last year and that's been dead for two decades. 

There is some good discussion on allocation in the preceding posts but I think one of the things that is becoming really apparent in traditional finance is that a 0% allocation to crypto is unarguable at this point. You can debate whether the correct allocation should be 0.5%, 1%, 5% or 95%, but probabilistic thinking is necessary.

Yes, because annualised return means "look at the last 12 months" only.  Come off it, no, that's not in fact the case.  The ISA has been going since 2017, the SIPP since 2012.  Total simple return over that time has been 108% for the ISA and 73% for the SIPP, with significant inflows to both over the years as I made further contributions with saving.  I'm comfortably ahead of equity markets, largely through taking significant risk with my investment decisions. Like I said, some of the IPOs I have participated in have done well, others have failed miserably, but I track the net performance of the pension and ISA and am very happy with both.  The pension has performed slightly better than the S&P, the ISA much better.

And yes, I will continue to argue that the correct allocation to crypto is 0%.  It's a purely speculative asset driven solely by the current mania, with no reason to expect the very longest-term value of each token from being anything other than zero.  It is very fair to say that calling my position "unarguable" is just plain wrong because I will continue to argue it from a "traditional finance" perspective, whatever that is.

User232002

silvercue said:

@darren232002   What I am suggesting is that when the coins are in a wallet when you sell them for Fiat you can pay CGT on them.  There is no way that HMRC can track the reward element of that crypto.    There are also exchanges with no KYC

I'm not sure you understand. They can indeed track the reward element as its on a public Blockchain. They can see money went from CB (or wherever) to a wallet address and then they can see that wallet interacting with whichever smart contract its interacting with (which staking would be). 

For example, Eminem recently bought BAYC 9055. Here is the wallet that holds that token: https://etherscan.io/address/0x5d752c35789bdfd1287971972091ba47afd3ac93 You can see that he also owns two ENS domains; rapmusic.eth and virtualweed.eth Funds to buy it came from giorgio.eth and you can follow the link to that address and see what that wallet owns as well.

Cardano explorer here: https://explorer.cardano.org/en Put your wallet address in and play around

Do they know this? & Will they track it? Probably not because, as we've established, they are miles behind. But I think its important to acknowledge that they can see on-chain activity if they particularly wanted to. I think no-KYC exchanges will be strangled by regulation over the next 3-5 years and its pretty hard to argue in their favour as much as I might like to. 

Cus said:

Can you have certain bitcoins ( and fractions thereof) that can be traced permanently? I wonder if one day you will be able to buy British legal tender bitcoins that are CGT free?

Yes it is (kinda) possible. Over the last few years there have been movements to have any Bitcoins that were used on silk road 'banned,' have only Bitcoins mined from renewable sources or in the US be allowed on exchanges. Both failed miserably.

Aegis said:

Yes, because annualised return means "look at the last 12 months" only.  Come off it, no, that's not in fact the case.  The ISA has been going since 2017, the SIPP since 2012.  Total simple return over that time has been 108% for the ISA and 73% for the SIPP, with significant inflows to both over the years as I made further contributions with saving.  I'm comfortably ahead of equity markets, largely through taking significant risk with my investment decisions. Like I said, some of the IPOs I have participated in have done well, others have failed miserably, but I track the net performance of the pension and ISA and am very happy with both.  The pension has performed slightly better than the S&P, the ISA much better.

S&P500 returns since start of 2017 are 110% yet your returns are 108% and 73%. 'Comfortably ahead' - I'll let others judge that.

Don't really want to get in to a measuring contest, but I've 4x'd my entire portfolio since the start of 2021 and that includes BTC/ETH and almost everything I own being 30%+ off ATHs.

Aegis

Aegis said:

Yes, because annualised return means "look at the last 12 months" only.  Come off it, no, that's not in fact the case.  The ISA has been going since 2017, the SIPP since 2012.  Total simple return over that time has been 108% for the ISA and 73% for the SIPP, with significant inflows to both over the years as I made further contributions with saving.  I'm comfortably ahead of equity markets, largely through taking significant risk with my investment decisions. Like I said, some of the IPOs I have participated in have done well, others have failed miserably, but I track the net performance of the pension and ISA and am very happy with both.  The pension has performed slightly better than the S&P, the ISA much better.

S&P500 returns since start of 2017 are 110% yet your returns are 108% and 73%. 'Comfortably ahead' - I'll let others judge that.

Don't really want to get in to a measuring contest, but I've 4x'd my entire portfolio since the start of 2021 and that includes BTC/ETH and almost everything I own being 30%+ off ATHs.

Again, you are conflating the time weighted return with the money weighted return, assuming that I must have invested in full at the start of the investment period.  As I already mentioned, there were significant cash inflows over both holding periods, hence the annualised and simple  returns are only worth calculating against a benchmark if you also account for the same cash movements, which I guarantee you can't do with my portfolio because I haven't shared enough data with you.  So yes, judge away, but be sure that you actually know what you're talking about, which you clearly didn't with the above comments.

As for 4xing your portfolio, well done.  I'd be equally impressed with the investment ability of someone who won the lottery - the results are clearly good, but calling that an investment strategy just wouldn't be accurate.  Perhaps with crypto it's better to compare to a Martingale strategy for betting, in that it can certainly look good right up until the point where it fails, at which point the interim value becomes utterly meaningless.

User232002

I just don't care enough to run precise numbers when approximations will do. Annualised returns for the last 5 years of the S&P500 are like 16 or 17%; so no I wouldn't be bragging about 22% in the midst of one of the biggest bull markets in history.

Thank you for your heartfelt congratulations on my portfolio performance. Unfortunately, I am not as pleased - mainly because I spend too much time replying to posts on here than conducting further research in the space. Something I'm looking to correct for 2022.

Aegis

darren232002 said:

I just don't care enough to run precise numbers when approximations will do. Annualised returns for the last 5 years of the S&P500 are like 16 or 17%; so no I wouldn't be bragging about 22% in the midst of one of the biggest bull markets in history.

Thank you for your heartfelt congratulations on my portfolio performance. Unfortunately, I am not as pleased - mainly because I spend too much time replying to posts on here than conducting further research in the space. Something I'm looking to correct for 2022.

You can't run the numbers because you have no idea of timings at all.  This can be illustrated by taking an asset which doubles in value in a year, and looking at the different returns you would see if you invested on day 1 (100%) or day 365 (0%).  This then has a huge effect on the calculated annualised return for the portfolio.  This is why comparisons to benchmarks have to be time-weighted to make any sense at all.  I'm genuinely surprised that you are having trouble grasping this - it's something every investor should know so they can check how they are doing compared to chosen indices.  Indeed, it's even stated for regular savings accounts, where people are always cautioned that they will not earn the full headline rate (e.g. 5%) on the full balance because they will be adding funds monthly

For the record, the comparison figure for the S&P500 over the same timespan as the ISA is 16.3%, taking into account flows of cash into the portfolio and assuming instant purchase of the index with no fees.  I'm quite happy to have outperformed this index by 6% a year annualised net of all fees, as I'm sure anyone would.

In any case, this wasn't intended to be a brag, merely an attempt to point out that no, I am not settling for a 0.25% annual return.  Instead I am growing my capital at a rate considerably over inflation while focusing on investments where I can fully understand where the value comes from.

Frankly I am fed up of the idea that anyone not investing in crypto is ignorant of investment principles.  I firmly believe that I can show myself to be a savvy investor, and I have chosen to avoid crypto assets because I can't get good answers to simple questions on how to work out fair value.  Without that, it doesn't matter how much it goes up by, I'm not buying if the only way to make money is for someone else to buy into the asset at a greater price.  This is Greater Fool Theory, and I made a decision a long time ago not to invest in anything where this was the only way to make money.

silvercue

darren232002 said:

silvercue said:

@darren232002   What I am suggesting is that when the coins are in a wallet when you sell them for Fiat you can pay CGT on them.  There is no way that HMRC can track the reward element of that crypto.    There are also exchanges with no KYC

I'm not sure you understand. They can indeed track the reward element as its on a public Blockchain. They can see money went from CB (or wherever) to a wallet address and then they can see that wallet interacting with whichever smart contract its interacting with (which staking would be). 

I understand that technically this could be done, but even if they had the know how - which they certainly do not, they would not have the man power, resources or time to trace millions or interactions on a blockchain just to try and see if they can possible find out which may be rewards, where they have come from and what tax they should attract.  The fact it would cost them more to do this than they will recover in taxes (99%+ of the time), even if they could do it, means there is zero chance of it happening.   

They also need a name to go with a wallet address - which they do not have.   Strangling KYC exchanges will be not be easy.  VPN and crypto to crypto trading will make this tough unless there is global effort to do so.  Restrictions do not seem to stop people trading crypto, they just make them more innovative.

Scottex99

You can't run the numbers because you have no idea of timings at all.  This can be illustrated by taking an asset which doubles in value in a year, and looking at the different returns you would see if you invested on day 1 (100%) or day 365 (0%).  This then has a huge effect on the calculated annualised return for the portfolio.  This is why comparisons to benchmarks have to be time-weighted to make any sense at all.  I'm genuinely surprised that you are having trouble grasping this - it's something every investor should know so they can check how they are doing compared to chosen indices.  Indeed, it's even stated for regular savings accounts, where people are always cautioned that they will not earn the full headline rate (e.g. 5%) on the full balance because they will be adding funds monthly

For the record, the comparison figure for the S&P500 over the same timespan as the ISA is 16.3%, taking into account flows of cash into the portfolio and assuming instant purchase of the index with no fees.  I'm quite happy to have outperformed this index by 6% a year annualised net of all fees, as I'm sure anyone would.

In any case, this wasn't intended to be a brag, merely an attempt to point out that no, I am not settling for a 0.25% annual return.  Instead I am growing my capital at a rate considerably over inflation while focusing on investments where I can fully understand where the value comes from.

Frankly I am fed up of the idea that anyone not investing in crypto is ignorant of investment principles.  I firmly believe that I can show myself to be a savvy investor, and I have chosen to avoid crypto assets because I can't get good answers to simple questions on how to work out fair value.  Without that, it doesn't matter how much it goes up by, I'm not buying if the only way to make money is for someone else to buy into the asset at a greater price.  This is Greater Fool Theory, and I made a decision a long time ago not to invest in anything where this was the only way to make money.

Please not the Greater Fool Theory again. Do you think about who's on the other side of your trade when you sell the IPO stocks that you've made 73% on? No. So why the fascination when it comes to crypto? Greater Fool doesn't exist to me if you can apply it any trading, the market will determine what the fair price is.

Also you've just said you've taken a higher risk strategy punting on some IPOs, some have done well, some have gone to 0, yet that's somehow far more savvy than what we do buying BTC, ETH and some sh1tcoins?

Each to their own but to me its crazy to watching crypto from the sidelines without at least a small amount of exposure. Time will tell how it plays out and I'm fairly certain I'm on the right side.

Ps. I'm in a rebasing Olympus DAO fork called Wonderland that right now is paying me an APY of 9.2% every 5 days. But that's about as degen as it gets, could easy go to 0 and I don't want any heads to explode on a Sunday night.

Aegis

Scottex99 said:

You can't run the numbers because you have no idea of timings at all.  This can be illustrated by taking an asset which doubles in value in a year, and looking at the different returns you would see if you invested on day 1 (100%) or day 365 (0%).  This then has a huge effect on the calculated annualised return for the portfolio.  This is why comparisons to benchmarks have to be time-weighted to make any sense at all.  I'm genuinely surprised that you are having trouble grasping this - it's something every investor should know so they can check how they are doing compared to chosen indices.  Indeed, it's even stated for regular savings accounts, where people are always cautioned that they will not earn the full headline rate (e.g. 5%) on the full balance because they will be adding funds monthly

For the record, the comparison figure for the S&P500 over the same timespan as the ISA is 16.3%, taking into account flows of cash into the portfolio and assuming instant purchase of the index with no fees.  I'm quite happy to have outperformed this index by 6% a year annualised net of all fees, as I'm sure anyone would.

In any case, this wasn't intended to be a brag, merely an attempt to point out that no, I am not settling for a 0.25% annual return.  Instead I am growing my capital at a rate considerably over inflation while focusing on investments where I can fully understand where the value comes from.

Frankly I am fed up of the idea that anyone not investing in crypto is ignorant of investment principles.  I firmly believe that I can show myself to be a savvy investor, and I have chosen to avoid crypto assets because I can't get good answers to simple questions on how to work out fair value.  Without that, it doesn't matter how much it goes up by, I'm not buying if the only way to make money is for someone else to buy into the asset at a greater price.  This is Greater Fool Theory, and I made a decision a long time ago not to invest in anything where this was the only way to make money.

Please not the Greater Fool Theory again. Do you think about who's on the other side of your trade when you sell the IPO stocks that you've made 73% on? No. So why the fascination when it comes to crypto? Greater Fool doesn't exist to me if you can apply it any trading, the market will determine what the fair price is.

You're wrong, Greater Fool Theory has a very specific meaning where the asset in question can only deliver a profit if someone buys it from you at a higher price for what is fundamentally the exact same thing you are buying now.  In other words, if you buy an asset designed to remain unchanged and expect to sell it for a profit at some stage in future, you have to rely on someone being more foolish than you are now because they will havew mssed the opportunity you spotted and now want to get involved.  It's the greatER fool theory because the exact same argument has to apply to you, i.e. you must have missed a cheaper opportunity to invest at some stage in the asset's past.  There's no other development - the cash flows into the network are purely in the purchase of assets from existing members.  The tokens themselves do not generate a cash flow or carry out any business, so ownership of the tokens does not impart any form of participation in cash flow, so you come back to the key point - you need to find someone to buy the assets from you in future for more than you pay now with no change in the asset itself.  This means that the pricing must be irrational. If you're happy with that feature and want to participate anyway, that's fine.  As I said earlier, it's your money to do what you want with, but for me I want to see real prospects for growth and revenue as part of my ownership.

As for who's on the other side when I sell, you're right, I don't care at all.  The reason for them to buy, though, is the participation in business activities mentioned above.  In the case of the IPOs, this usually means that they have had an interesting idea which other people are willing to spend money on.  As such, the price rises if the company does well at turning risky potential into lower-risk value.  When it gets boring enough to pay a stable dividend, it may well not interest me any more, at which point I will sell and find something else.  The person buying at that point will do so because they can achieve stable income and some growth rather than the pure growth that I target because of buying at the earliest possible stage.

There's a huge difference between what I do and buying crypto assets, night and day.

Also you've just said you've taken a higher risk strategy punting on some IPOs, some have done well, some have gone to 0, yet that's somehow far more savvy than what we do buying BTC, ETH and some sh1tcoins?

Each to their own but to me its crazy to watching crypto from the sidelines without at least a small amount of exposure. Time will tell how it plays out and I'm fairly certain I'm on the right side.

Indeed, and as I said before, it's your money to do with as you please.  I'm worried enough by this craze that I want to warn people so they can at least think about what they're doing before risking a huge amount of money on something that I genuinely think is a mania and nothing more.

I've also said that this has nothing to do with risk profile.  My tolerance for risk is extremely high, but I still need to make sense of a proposal before investing, and as I have mentioned, I do not see the investment case for crypto assets other than price increases that can be completely explained by mania.

Shocking_Blue

darren232002 said:

Shocking_Blue said:

Dear all,

Docusign, Coinbase, CME, Hut8, Canaan, Nvidia, Greensky, FutureFintech. Also looking at Hood.

This would be a dabble (no more than 2% of portfolio in total), but I think it makes sense and is worth the relatively small risk.

Any ideas about possible ETFs, or the above, appreciated, but will post as a new thread if this is off current topic.

Thanks.

Whats your thesis and reason for not holding BTC but holding all of the above? 

To tell you the truth, the seemingly complicated nature of buying/holding BTC. However, have been looking at eToro and they seem to have a consumer-friendly approach. Wondered what opinions were on their 

Crypto CopyPortfolios

https://www.etoro.com/crypto/how-to-invest-in-cryptocurrency/

Scottex99

I've also said that this has nothing to do with risk profile.  My tolerance for risk is extremely high, but I still need to make sense of a proposal before investing, and as I have mentioned, I do not see the investment case for crypto assets other than price increases that can be completely explained by mania.

 Exactly, you don't see it because you don't get it. That's fine.

But if you're going to use the argument of company do good = stock price go up = not greater fool theory because... dividend. Then you need to better understand the tokenomics and governance of some of these crypto protocols and what they also do/can do. Plus the value and liquidity that is already locked in them. Which is Billions.

Just found this, only 4 mins in but looks like it's at least trying to be balanced:

https://www.youtube.com/watch?v=l5TqlnD1ZSI