Why am I against 'investing' in cryptocurrencies.

When bitcoin was trading in the 4-5k region in late 2017, I was absolutely against the idea of putting any money I had into it, regardless of what the market sentiment is. When it shot up exponentially to ~20k, I was surprised, not because I thought I was wrong, but rather how large a magnitude can sentiment push a bubble until (didn't learn enough from dot-com bubble I guess).

Regardless, I have no issues if one is here to speculate, to attempt to make a quick buck and leave. Rather, a cult following of sorts has begun rationalizing their purchase as a non-financial investment. That is absolute nonsense. Here are the common arguments:

"Bitcoin (or other cryptocurrencies) is more efficient compared to cards/cash/current payment options"
No it is definitely not. As of writing, it takes ~10mins for a bitcoin confirmation to go through (https://www.blockchain.com/en/charts/avg-confirmation-time) with once peaking at 11,000 minutes. By the time 183 hours have passed I am not even sure if the thing you are paying for/is paid is even near the original price you intended to sell.

To pay with bitcoin, I have to whip out my wallet app, or even cold ledgers, wait for the seller to key in the requested payment amount, scan his QR and wait for the confirmation time for the transaction to actually process. While that does not sounds exactly like a hassle, compared to how easy it is paying for stuffs with contactless payment (visa paywave) or even straight cash, why would I even consider a new payment option? It takes approximately 5 seconds for me to take out my wallet from my pocket, grab the card, tap, and keep it back. There is literally nothing you can do to shorten this transaction time other than having someone else pay for me.


"Cryptocurrencies offer a way to bypass fees levied by financial institutions for transfer such as wire fees/merchant % commissions"
Yes banks charge a rather non-negligible amount of fee required for wire transfer overseas, at about 2%. That means with a $10,000 payment, $200 will be going to the banks. If you are actually carrying cash yourself, most countries have a 10k USD limit so it is essentially costless. How many of you cryptocurrencies 'investors' actually need to move tens of thousands of funds globally on a daily basis? Don't joke.

With regards to the merchant % commissions, I am pretty sure they are going to charge you more for making them go through the hassle of training their staffs and to implement cryptocurrency adoption, to constantly convert them to fiat (so they can actually USE those currencies) and the risk hanging over their shoulders that their bitcoins might plunge in value any second.


"Bitcoin is the currency of the future, it is a store of value"
Lmao, please.

From Wikipedia:
"A store of value is the function of an asset that can be saved, retrieved and exchanged at a later time, and be predictably useful when retrieved. More generally, a store of value is anything that retains purchasing power into the future."

Predictably, the key word is predictably.
Now look at this.

Which part of this looks predictable?













"I am in for the technology"
The technology is the blockchain. Bitcoin is simply something that is built on the blockchain, albeit being the first commercialised use of the blockchain. The technology itself is simply a distributed p2p ledger that is tamper-proof. Regardless of that, the genesis block and blockchain scripter can still implement a backdoor the the genesis block (and subsequent blocks) to be modified.

There are literally countless uses for the blockchain (although most of them are useless fluffs) other than to ledger cryptocurrencies. One saying that buying bitcoin is because they believe in the blockchain technology is like saying to buy a pizza because they believe in the oven and fire.


"The price will stabilise after all the hype and FUD has died out and it will be the stable new currency!"
Then why the hell are you even buying bitcoin?! If the price is going to stabilize that means you can absolutely have no capital gains or gains of any sort by buying into it. The US dollar is rather stable right now, do you see people stashing it simply because their value doesn't fluctuate much?



To end things, feel free to check out this article https://www.cnbc.com/2018/05/05/warren-buffett-says-bitcoin-is-probably-rat-poison-squared.html

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Warren Buffett is still not a fan of investing in bitcoin.

The Oracle of Omaha reiterated his negative view on the cryptocurrency, according to CNBC's Becky Quick.

Charlie Munger, Berkshire's vice chairman and long-time Buffett collaborator, said during the meeting that trading in cryptocurrencies is "just dementia."

In January Buffett warned investors about the craze over bitcoin and other cryptocurrencies in interview with CNBC.

"In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending," the chairman and CEO of Berkshire Hathaway said then. "If I could buy a five-year put on every one of the cryptocurrencies, I'd be glad to do it but I would never short a dime's worth."

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Invest fundamentally and hold, does it work?

Given the recent correction and really red stock markets globally, huge gains were probably wiped out. Capital gains wise even my portfolio dipped into the red from a substantially strong green. One might question oneself if holding through all the gains and the bull market is even worth it, actually it's not that bad.

Here's a hypothetical scenario of purchasing 100 shares of STI ETF every time it falls below $3.10, 100 shares each time. This is rather similar to what I have done, except that I buy them in chunks of 1000-2000 shares each time. Regardless, this scenario is easily replicable for your average retail investor with blue chip investment plans.

Refer to the excel document below:
https://drive.google.com/open?id=162oGGkmsorrF7F_KcbboscZ_Tx6oJnY6

From a starting period of 3 years ago (November 2015) where the closing price was $2.95, the hypothetical portfolio would purchase 100 units of STI ETF in the month whenever it closes below $3.10. Fast forward to today, STI ETF closed at $3.10. On the surface, it's only a $0.15 gain over 3 years, which is roughly equivalent to 5%, that seems really pathetic - might as well place that in time deposits.

However, in the months where it fell even lower, investors who have the courage to buy in would have accumulated shares at a cheaper average cost per share. Inclusive of (averaged) dividends, the actual returns would actually be 17.2%, with the highest profit being 33% when it peaked. Nowhere after the 3rd month will the investor be in the red even though prices tend to fall or stagnate.

End of the day, nobody likes it when the market plunges, but everybody wants to buy stocks when the prices are low, so be patient and accumulate, even though times are not exactly great. Chances are it will pay off when you least expect it.

Disclaimer: Fees, commissions, and taxes are not taken into account for these purchases. The author is currently LONG on STI ETF, and have been for a rather long time.

Everybody is a winner in a bull market

But how many are still standing when the bear hits?

Portfolio as of 2nd May 2018

These few months have been rather interesting, given the huge volatility among global uncertainty and overvalued markets. The DOW's meteoric rise took a tumble, and we're still in the red for 2018. Seeing the markets go higher and higher is nothing spectacular for individual stock picks if the entire market is rising as well, everyone thinks they are Warren Buffett when the stock they buy appreciates in value when the market is going up, but simply chalks it to bad luck when their shares falls with the market.

In in a situation like that, you are no better off than the market, your share price did not appreciate because of your analytical skills, it's because you're lucky and simply did nothing too wrong.

Interesting enough, while I did not exactly beat the market or have significant profits over this bear period (still long everything actually), days like these are getting more and more frequent. If you notice, EVERY Index ETFs are in the red, except the individual stocks I bought. These are the guys that survived the near 20% drop in the DOW; retaining most of their peak valuations. In addition, I bought these stocks based on hugely differing standpoints:
- Emerson for it's astounding track record in operations and dividends payout, and also extremely widely diversified and active in acquisition and maintaining relevant.
- Berkshire Hathaway for it's ridiculously diversified businesses, led by my idol WB, and generally strong earnings replicating the US economy without being subjected to volatility in share prices as their businesses are all privatized under the umbrella of BH. They also do not pay any dividends.
- NVIDIA for being the forefront and largest market share in technology. Extremely overvalued, entirely new sector, also pays dividends of next to nothing.

Of course I am not saying my stockpicking skills are godlike and that I strike winners every time, today is just a day where my picks stand out. They don't do that everyday - just often enough to make a difference. I also diversify my risks appropriately as much as I would like to believe in my analytical capabilities, evidenced by the fact that I do hold indexes ETFs.