Investing Game Plan For The Rest Of 2021

What? It’s June already?

The first half of 2021 was nothing short of surprises. At the start of the year, we saw stocks and crypto going up to insane all time highs and growing way beyond rationality. Bubbles are everywhere for sure.

We saw a sector rotation where Wall Street decided to shift from Growth to Value after we saw treasury yields climb, and also future concerns of interest rate hikes which was seen as a negative news for growth stocks which are yet to be profitable and relying on borrowed money in a low interest rate environment.

Crypto saw a huge run up at the beginning of the year and then a cascading liquidation in May when Elon Musk voiced out environmental concerns as well as a barrage of FUD from the mainstream media and China’s old crypto banning news setting more fear among newer crypto investors, causing further sell-off.

On the macroeconomic side, central banks worldwide are still printing money every second which means currency debasement and high inflation are a huge future concern.

Eventually, the money printing side effects will start to surface in the economy and tax rate hikes, consumer price inflation, asset inflation with rising real estate, commodities and equities to see higher valuations for sure.

With so many things happening on the macro side, what am I planning to do to best hedge myself from inflation? And also to better position my portfolio in this macro environment and navigating through these uncertain times.

Investing Strategy

My philosophy is really simple. I look out for companies which I know will exist 10-20 years from now, and I want to own companies that are still in the early innings of the business cycle with a monster margin and solvent balance sheet and that means such companies will have much more room to grow in the future.

Traditional financial metrics such as P/E, P/B or DCF models are simply not a good gauge of most growth stocks in general since they are more suited for valuing mature businesses with great cashflow generation and healthy margins in the first place.

These are stocks which already had their “Multi-Bagger” moments and I am referring to giant companies such as Apple, Wells Fargo, Coca Cola or Berkshire Hathaway which have already 5X or 10X their price since inception. For a 2 trillion market cap company like Apple to 2X in their stock price, they need to achieve a crazy market cap of 4 trillion market cap, which is insane.

Instead, I am looking for Small or Mid-Cap growth stocks with a market cap in the single digit billions. For them to grow into a 100 billion company if picked correctly will mean that you can even 10X your initial capital if you know where to look.

This is why it is so important to understand that fast growers are mostly found among smaller cap stocks but in return for their returns potential, you pay the price in volatility.

If you are investing for the short term and unable to stomach the volatility, then it may be difficult for you to find great investments that can triple or 10X your money.

Aside from growth stocks, I am also bullish on the cryptocurrency space if you have not known already. Blockchain technology became viable as an alternative to our current financial system thanks to the Bitcoin white paper.

With Bitcoin and Ethereum as the OG in the crypto space, we are seeing continuous adoption among the younger generation who are serious about building their wealth.

Equities Strategy

Growth Stocks Performance (1Y) Time Weighted (1 June 2021)

For my DIY equities portfolio, I am currently concentrating my allocation to 7 stocks, and they are:

1. Square Inc (Payment/Fintech)

2. Shopify (E-Commerce)

3. Alibaba (E-Commerce)

4. Teledoc (Telemedicine/Tech)

5. Etsy (2-Way E-Commerce)

6. Coinbase (Software/Fintech/Crypto)

7. Fiverr (Gig Economy Platform/Software)

As you can see here, my portfolio is concentrated towards a specific theme: App-Based Economy and Digitalisation.

I believe that the world is slowly shifting towards full digitalisation and with more than half of the world owning at least one smart device, there is no doubt the majority of our livelihood will be done online, in a wireless yet connected economy.

This shift was already taking place before the pandemic, but the pandemic actually accelerated this trend as we see tele-conferencing becoming the primary mode of communication and companies are adopting to remote working instead of strictly going office to work.

Aside from the way we work, our way of lives in terms of the way we shop, the way we transact, the way we order food, the way we manage our finances, are all done online without the need of going to a physical store.

Even news and information can be found online and there is no longer a need for traditional media such as magazines or newspapers to obtain first-hand information.

With the world slowly heading towards an app-based economy, the increasing demand for further convenience and ease of use of apps and platforms will be more important than ever before.

In the scenario such as a lockdown, Telehealth services such as Teledocensures that even if we are facing a lockdown, we will still be able to diagnose our symptoms with a medically certified doctor and having our medicines delivered on the fly at ease. Gone are the days where we need to be at a location face-to-face to accomplish tasks as our smart devices become smarter and the technological infrastructure continues to advance and improve.

2-way E commerce marketplaces like Etsy are also highly anticipated investments due to one of my favourite economic moat: Network Effects.

As more users shift to online E-commerce be it buyers or sellers, thenetwork effects will continue to bloom and bring in greater revenue for marketplaces like Etsy. Whether its more merchants coming on board or more buyers transacting on Etsy, no matter what, its a win-win situation for Etsy.

Coinbase is the network effect monster play on crypto adoption. Since I am already bullish on crypto’s future, it was impossible for me to ignore Coinbase as they are just like Facebook, which is a gateway for users to transact between fiat and crypto, and not only that, Coinbase is slowly becoming a multi-revenue giant as they develop their media business and also further institutional onboarding, all of which deepens their network effect and strengthens their moat over time.

As the pandemic rages on, many individuals lost their jobs and became unemployed in the process. Fiverr then became a lifeline for these individuals as more and more self-employed individuals signed up on Fiverr offering freelancing services.

Fiverr covers many different verticals and positions itself as one of the top gig-economy plays right now. To me, Fiverr is potentially a multi-bagger for years to come and I wont expect this shift towards a gig-economy to slow down any time soon.

As companies reduce in size to compensate for the loss in revenue and a shift to remote working conditions, more individuals will look into the gig-economy as an alternative source of income and Fiverr will be able to leverage on their expertise and platform while build a deep network effect with their partners.

All in all, my equities allocation right now is how I see the world play out over the next 10 years and the shift we are seeing right now are all pointing towards the direction of an app-based economy.

With the technological advancements in Big Data, IOT, 5G, AI and the paradigm shift of the way we live, the world will not be the same like it is right now and I expect many of the top incumbent companies to fall in the next 10 years.

Traditional and mature companies in sunset industries might see their last days in the sun and slowly replaced by agile and fast growing counterpartsas the world continues to move at an extremely fast pace.

Those who refuse to change will eventually be phased out and the world will move on without them. (Hello Kodak and Nokia.)

Crypto Strategy

For my crypto allocation, I am heavily concentrated on Ethereum right now (capital appreciation + DCA) and I am not planning to take profits at all given the serious adoption and deep-seated network effects with regards to Ethereum.

Crypto Performance (1Y) Time Weighted (1 June 2021)

Before I dive deeper, here are some of the current holdings in my crypto pie:

1. Ethereum (Utility/Store Of Value)

2. Bitcoin (Store Of Value)

3. Polkadot (Ethereum Alternative/Blockchains of Blockchains)

4. Pancake Swap (Yield Farming)

5. Fantom (Staking/Utility/Ethereum Alternative)

6. Nexo Token (Dividends/Incentives)

7. Binance Coin (Utility/Ethereum Alternative)

8. Auto Token (Governance/Yield Farming)

9. Zilliqa (Staking/Utility/ASEAN Blockchain Adoption)

10. Band Token (Oracle)

11. Sushiswap (Yield Farming)

My current portfolio of crypto still requires some finesse and I am still thinking how I should allocate the proportions more efficiently.

The May correction/liquidation has resulted in some of my positions losing more than half its value on paper but I’m not too concerned at all.(Did not sell anything at all)

A lesson learnt from the sell-off is to have a Stablecoin allocation that can earn high yield and at the same time act as a “bullet” to be deployed during a crash such as the one in May.

If you bought Ethereum at the recent low of $1900 USD and sold it at current levels, you would have made a decent 40% gain, which is basically the returns of an exceptional year of the S&P 500.

Know what you own!

Each crypto token has different purposes and value proposition and one should always do thorough research before committing to an investment decision.

The same rules that apply in the stock market applies to crypto as well, and that is to do your own due diligence and to understand what you own.

Are you able to explain to a 3 year old why you own Bitcoin or Ether? If you can’t, then you did not understand it fully and the means your conviction might be very thin.

When a panic sell off comes, you are more likely to sell it off at a loss than holding it for the long term simply because you didn’t understand why you bought it in the first place.

As the crypto space continues to grow over time, many of the tokens I hold today may fall behind over the long term so in terms of managing the allocation, crypto’s allocation will be way more active than my equities and I will be more hands on in this space, such as through the interaction with DeFi.

Yield Farming Opportunities

Aside from simply buying and holding these crypto assets, I am also actively earning high yields from them either through staking, liquidity mining or yield farming.

I do so mainly via the Binance Smart Chain. The allure of Binance Smart Chain is that you can simply use fiat to buy your crypto on Binance.com, and then port them over to Binance Smart Chain by withdrawing them to Metamask (DeFi Wallet).

Gas fees are thousand times cheaper than Ethereum but of course there are even cheaper solutions out there. (for the sake of this article, the focus will be BSC)

The process is extremely simple as compared to side chain solutions such as Polygon or other blockchains such as Fantom or Solana which typically requires bridges but that is not the topic of today.

Once on Binance Smart Chain, you can connect to different Decentralised Applications (Dapps) such as Pancakeswap, Pancake Bunny, Belt Finance, Autofarm and many more, allowing you to earn high yield on your idle crypto assets through auto-compounding, be it Stablecoins, single asset such as Bitcoin or LP-pairs like BTC-ETH or BNB-AUTO for example.

Each have their own pros and cons and every farm have a different strategy and gameplan to go about earning high yield which ultimately depends on what you are trying to achieve.

If you just want to be a HODL-er, stick to 1 farm and yield farm over the long run, but please stick to a well known farm that is well-audited to minimise exploit or smart contract risks. (lower risk does not mean low risk, so please approach DeFi with caution and due diligence)

Right now, I am getting more BTC, ETH, CAKE (Pancakeswap), BNB, AUTO, FTM, SUSHI from yield farming of between 14% APY to 500% APY.

As for staking, I am currently staking my DOT, ZIL, BAND and earning between 9%-17% APY on my staked tokens via Atomic Wallet and Celsius Network.

Moving forward, I may be concentrating on a few core positions to farm so as to maximise profits and to focus on the projects which can last over the long run.

As crypto is moving at an insanely fast pace, there is simply no way to keep up with the new developments every day so do note that unless you are willing to spend a few hours per week to research and read up news on the crypto space, yield farming might be out of reach given that DeFi is basically like the Wild West right now.

Centralised Solutions

For users who do not wish to deal with DeFi due to whatever reasons, you still have centralised solutions such as Nexo and Celsius which I am still using right now.

Nexo token also offers benefits of higher interest, dividends and also daily compounding while Celsius supports a wider range of crypto assets to earn interest on.

Concluding Statements

In retrospect, the past 5 months had been an insane roller coaster for the markets so far.

We saw massive boom and bust cycles in the matter of weeks and many exciting developments in both the macro-environment and also sentiments among Wall Street are becoming more and more accepting of crypto.

Crypto continues to be clamped down by Central Banks as the big banks continue to find a way to launch their Central Bank Digital Currencies (CBDC) before they get phased out by the innovation of the blockchain space.

As we head into higher inflation among consumer prices and asset prices while governments continues to print more money and get into bigger debts, I want to be invested into assets which are best protected against this ordeal and crypto plays a big part as a “short” position on fiat currencies.

The more money that is printed = the more the currency devalues = the more crypto prices will boom.

As fiat currency slowly devalues over time, investors worldwide will be scrambling to find ways to hedge against inflation and that would be done through the purchase of assets. With crypto being a 2 trillion market cap entity, I am expecting a wall of money to flood into crypto soon.

For those that are not yet invested in crypto, I recommend you to read up more as the space shows an immense potential and one of the greatest wealth transfers that is bound to happen in the near future.

Please do your own research and all of these developments are merely how I see things to play out over the next few years given the implications of money printing and the macroeconomic environment.

No matter what the market does, always stay invested in the market. Take out the emotions when investing and focus on fundamentals, be it stocks or crypto.

What do you think? What is your game plan for the rest of 2021? Is your portfolio ready to fight inflation and are you bullish on the crypto space? Leave your comments down below!

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The Power of Low Fees

One huge advantage I have as an investor is paying very minute fees which can really eat into returns in the long run because I am using Firstrade to buy US Stocks which has absolutely $0 fees and extremely fast wire transfers for deposits and lightning fast trade executions.

Ever since I switch to Firstrade last year as my main investment vehicle, I saved up on a ton of fees and hence able to achieve way better returns than before. I saved up more than 5 times the fee paid in 2018, 2019 and 2020 this year due to the switch and I am really happy thus far.

Of my entire investments in 2020, fees only take up 0.1% of my entire portfolio! (2018+2019+2020 combined across all brokers and Robo)

If you need some inspiration for companies to research, you can check out my post on 5 stocks to buy if the market crashes here.

For those who are already into Crypto

Want to learn how you can earn high yielding interest rates on your idle crypto assets in a secure, safe and easy manner? You can read up more on my post here to learn more about Celsius and Nexo which give you interest on your crypto assets!

Or do your due diligence on Bitcoin in my post here and also my crypto exchange of choice Gemini here if you are looking to buy your first crypto!

Or want to learn more about DeFi in a simple to understand manner? Click here to learn more!

Referral Links (Click and Sign Up)

Gemini Exchange: Deposits and buy US$100 or more crypto on Gemini and you will earn US$10 in BTC.

Coinhako Exchange: You can create an account by clicking the link and then enter promo code: COINGECKO when doing a buy/sell and enjoy 20% trading fees discount!

Binance Exchange: Create a Binance.com account here and trade the widest range of crypto pairings!

Celsius Network: Earn US$40 in BTC for free with your first transfer of US$400 or more in any crypto asset and wait for 1 month!

Nexo: No referral events at the moment 😦 Just sign up and enjoy this great product!

Disclaimer:

The content here is for informational purposes only and should NOT be taken as legal, business, tax, or investment advice. It does NOT constitute an offer or solicitation to purchase any investment or a recommendation to buy or sell a security. In fact, the content is not directed to any investor or potential investor and may not be used to evaluate or make any investment.

Do note that this is not financial advice. If you are in doubt as to the action you should take, please consult your stock broker or financial advisor.