Stocks and Crypto Portfolio Update (July 2021)

What a month! From inflation fears to crypto market euphoria of NFT gaming led by Axie Infinity which drove the start of a new market segment called “Play-To-Earn” to the short squeeze of Bitcoin and the renewal of a crypto bull run.

Couple that with overall bullish-ness of the traditional markets, we saw a rally in the month of July from the tech sell off and crypto crash just months and weeks ago.

Some Minor Updates

I haven’t been able to come up with a blog post recently because I have been busy handling my Axie Infinity Scholarships and I am happy to say that there are now 8 scholars under my wing. Not too bad for the first 2 weeks of this scholarship business.

Starting a scholarship from the ground up was definitely daunting and there were a lot of things to take note of. It is the same as starting a business or investing into a property and finding tenants; in this case, finding scholars so you can rent out your Axies and in return, you earn a cut of their earnings. The more scholars, the more scalable that passive income stream.

At current SLP price of approx $0.3/SLP, each scholar should at least generate $1000 SGD (net earnings) per month. 8 scholars would give a whopping $8000 SGD passive income per month, to me, that’s wild, and I am still going to onboard even more scholars once the Axie eggs hatch every 5 days.

If you have no idea what I am talking about here, you can read my post here to find out more yourself.

Market seemed to have bottomed in June

Stock market or crypto market, it doesn’t matter. We saw big tech names fall off the cliff after the Fed started raising ideas about closing the money printing taps at an earlier date and overall inflation fears, while on the crypto side, China’s crackdown on Bitcoin mining also saw Bitcoin and the broader crypto market sell off around the same time in June.

In particular, Bitcoin bottomed out at roughly 29K/BTC and we saw a short squeeze from the months long of accumulation by institutional investors. The supply shock from the accumulation (based on on-chain metrics) and the funding rates from Bitcoin futures were catalysed when rumours about Amazon offering crypto asset as payment method saw an immediate liquidation of short sellers (mostly retail investors) and the short squeeze followed. Bears were in disbelief while Bitcoin rapidly rose to hit the 40K USD resistance band.

US Tech stocks also rallied during this earning season which is expected, since there was a market correction in June. Now that central bank policies are more certain, investor demands for high risk asset seemed to be picking up traction.

Overall, July was a great month if you bought stocks or crypto during the market sell-off and held on to it. You would be sitting on decent profits right now.

My Current Positions

Currently, I have a total of 13 positions spread among my US stocks and crypto portfolio.

I trimmed off some crypto positions that were not meaningful to my portfolio allocation, and concentrated fire onto a few high conviction plays.

The current allocation looks like this (Bold ones are crypto and unbold ones are stocks):

I use StocksCafe to keep track of all my investments (include Robo) + research on stocks. You can also view my portfolio as well as many others so you can compare your own performance with other investors. If you are interested in signing up, you can use my referral link** to sign up and access premium features for 1 extra month for new users. (3 months)**

Increasing Conviction in Crypto Market, Particularly NFT Gaming (Axie Infinity)

If you look at my current allocation and compare to the previous update, you will realise there is a new allocation and that is my Number 3 spot: Axie Infinity Token (AXS)

I have shared various times on my Telegram channel about the growth numbers, fundamentals and just how early this market segment is. There are 2.5 billion individuals who are unbanked and we have 1+ billion gamers around the world.

You can see what the total addressable market for this niche yourself. And it is still so early because most people don’t even realise how huge of a potential this is going to be.

The future generation, as we know it, is going to be the first generation of young adults that might grow up without a bank account. Why? Because they don’t need to. Why bother parking your money when interest rates are dirt low at 0.05% APY? If you adjust it to inflation rates, your money is rotting and compounding negatively if you left all of your cash in a bank account.

Instead, young adults in the future will hold their money in Web3 wallets such as Metamask. They can easily get 20% APY on Anchor Protocol on their stablecoins without any KYC requirements or income assessments, simply approve the smart contract on-chain, and poof, your money is deposited into the protocol and generating yield.

Shifting towards a digital economy

The future will be digital. Like it or not, Covid-19 sped up this trend and our economy will turn digital forever. Just ask yourself, how many hours do you spend on the internet, and how many hours do you spend hanging out, physically, and not using social media.

So with this growing trend, I believe Axie Infinity to be the solution to all of these. It is the marriage between gaming and economic productivity. Gone are the days where people spend tons of money in a game only to get one thing in return: Wasted Time (and money)

With Play-To-Earn picking up pace, people living in emerging markets will stand to benefit the most as they can earn more than their minimum wage, while first-world country individuals can bolster their income further by playing a game.

Gaming hours are now turned into productive hours with actual monetary value.

Re-Allocating Capital

Aside from increasing my position in AXS tokens, I have also pulled out from the following:

1. Sold Teledoc (Weak Mid-Term Prospects)

2. Consolidated my crypto positions (Concentration Diversification)

*My Ethereum position right now is made up of a mixture of Ethereum that is being yield-farmed and stored in the form of Axies.

Aside from that, the capital from Teledoc will be converted into a stable coin before I decide on where I can allocate to next. Perhaps, simply buying ETH and AXS on pullbacks.

With the new semester coming along and my scholarship business running in full engine, I don’t think I will be able to write blog post as often anymore.

Also, as I dived deeper into the crypto rabbit hole, I realised how huge of an opportunity cost I am incurring if I continued to just allocate to stocks.

Crypto offers so many new dynamics and dimensions as to what you can do to invest, and the risk-reward (Sharpe ratio) is also marginally higher compared to what you can achieve in the stock market.

30% annualised returns in the stock market is market-crushing, but it may just be a normal number in crypto. Of course this is not always the case, so you do have to do thorough research and build conviction yourself.

Here is the breakdown of my position in a pie chart:

Yes, the big chunk right there is Ethereum. 🙂

I am happier with my allocation right now and the returns also proved why.

Stocks+ Crypto Performance (29 July 2021)

I am comparing it beside benchmark indexes like STI, Total World Stock Index and S&P 500 to show the outperformance of a portfolio if you were to allocate to crypto.

Not only do you achieve greater risk-adjusted returns, you also get more diversification since stocks and crypto are pretty uncorrelated.

The +75.33% Year-To-Date return thus far is not even including the interest yields from staking/yield farming and my SLP earnings from my Axie scholarship program, if I combine all of these together, my returns thus far would be even higher.

The strategy I adopted is pretty simple as well. Once I have built a deep enough conviction around a company or crypto project, I simply dollar-cost average either weekly or monthly, whenever I have extra spare funds.

My plan right now is to reinvest my passive income from my Axie scholarships back into the game and breed more Axies so that I can expand my scholarship further and recruit more scholars. If one scholar rakes in a net $1000 SGD passive income per month (assuming SLP is $0.3 each), having 10 or more scholars would easily be a general manager or director’s pay in the corporate world. Just that this is even better, since it is passive in nature. 😉

Crypto 47.3%, Stocks 52.7%

Like I mentioned before in my previous posts, my stocks allocation is pretty much set and I don’t think I will be initiating any sells unless circumstances change or the growth story is just not the same anymore.

My goal now is to continue DCA into my crypto position since I have higher conviction in crypto than in stocks. And my initial crypto position has already ballooned and about to flip my stocks allocation soon.

If you are bullish on crypto but not crypto-savvy, you can utilise CeFi solutions to earn passive income

For centralised crypto solutions, I am currently earning passive income on the following:

• Hodlnaut (Earning interest on Ethereum/Bitcoin/USDT/USDC/DAI)

I am getting consistent returns every week and it is also compounding, which is a good thing as compound interest is the most powerful way to build wealth while I am literally doing nothing.

This path is more for passive investors who do not want to take on huge DeFi risks and if you are curious, I am earning my interest in ETH with my deposited ETH/BTC and stablecoins.

Points to Take Note

Investing in crypto is not all rainbows and butterflies. There are massive amounts of risk but in return the rewards are way higher than you can expect on the stock market.

There is always a give or take in investing, as nothing that offers high returns is without the risk as well.

Before you decide to jump into crypto due to FOMO and greed, here are some things to take note of.

1. Lack of Due Diligence (Not understanding the crypto asset and blindly entering based on price and other’s opinions)

2. Exchange Hack Risk (There are many scammers and hackers out there in the crypto space)

3. Volatility-induced irrationality (Many new investors panic when they see huge price fluctuations resulting in panic selling behaviours)

4. Hot Wallet/Cold Wallet (Need to understand the difference between the two as that is how you will store your crypto assets)

5. Smart Contract Risk (This applies to those who are already in the crypto space, there may be smart contract bugs or loopholes that can drain liquidity so do take note of the project before putting your money in)

Some of these points apply to Stock market as well, and to new investors, if you are unsure whether you can stomach the volatility, you should start from the stock market first.

If you are uncomfortable seeing your net worth drop 50% or more, you should not be in crypto.

Crypto is not for everyone

At the end of the day, your investment portfolio should reflect your own personality, that is why everyone’s portfolio is different and it is futile to copy another person’s portfolio if you don’t understand what you are doing.

Crypto can be a great place for investors who knows the risk of the asset class but appreciates the innovation and technology driving the space and understands the risk-reward ratio over the long term.

If you are an individual who simply cannot take more than a 5% paper loss or cannot trust anything that is not MAS regulated, then please stay out of crypto at all cost.

Risk and Return goes hand in hand. If you are not willing to take 50% or more potential drawdowns, don’t expect to see 200%, 300% or 600% upside returns on your portfolio over the long run.

Every portfolio follows the Efficient Frontier with some being on the lower end and some being on the higher end, the trick to get market-beating returns is to be on the higher end of the spectrum consistently and effectively and understanding that asset allocation drives returns.

If you think all these are still too complicated, you can consider joining my telegram group where I share articles, investment opportunities and more research based content on an almost daily basis. You can also ask questions, and take part in polls to see how others think as well!

Join My Tele Channel Here For Blog Updates And More!

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?

Earn Yields on Those Crypto With These Platforms

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 read up more on Hodlnaut here which is a Singapore-based crypto lending platform with market beating interest rates

What is Bitcoin? Answers here

Or do your due diligence on Bitcoin in my post here where I debunk some of the myths regarding Bitcoin.

What is Ethereum? Simple Guide Here

I did a bite-sized article on Ethereum for you to get a crash-course on what the buzz word is all about here.

Gemini Exchange (My Favourite Crypto Exchange)

Also my crypto exchange of choice Gemini here if you are looking to buy your first crypto!

Too Many Crypto Platforms? Here’s a Crypto One-Stop Solution

If you think there are too many crypto platforms out there, here is a simple solution for you. An all-in-one app for you to earn yield, trade, invest or borrow crypto with high security and assurance. Check out my Matrixport review

What is Decentralised Finance (DeFi)?

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

How to Value Crypto Assets?

Learn more about how you can put a “fair value” on crypto such as Bitcoin, Ethereum and more here

Crypto 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!

Hodlnaut: Earn US$20 in BTC/ETH/USDT/USDC/DAI for free with your first transfer of US$1000 or more in the corresponding crypto asset of your choice!

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!

Matrixport: Get a $1288 free coupon trial to try their product and earn $20 in USDC when you sign up successfully and become a qualified client!

Nexo: Earn US$10 in BTC for free when you transfer US$100 or more in any crypto asset of your choice!

The Power of Low Fees (My US Broker!)

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)

Alright that’s it! For now, think long term, tune out the noise and avoid the temptation of gambling meme stocks, think of the companies that will do well in the long run simply find bargains/dollar cost into your positions. 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.

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.