As I talked about a few months ago, last year (2017) was the first year in which I actively managed speculative investments, as opposed to having 100% of my net worth in stable, safe, boring investments. I only speculated with a small percentage of my overall net worth, since that way, if I lost money, I’d be upset, but I’d still be okay.
It’s important to understand the difference between speculating and investing for this conversation, and if you don’t, please read this before continuing. 2017 was the first year in which I actively managed my investments and speculated, in addition to having my normal “boring” investments.
Normally, I’m accustomed to 5% returns, 8% returns, 4% returns, things like that. Last September, I reported that that my overall portfolio, the boring part and the speculative part, were up 37% in the last 12 months.
How did I do overall for the entire year of 2017? Was it more than 37%?
Yes, way more. Because of bitcoin’s skyrocket at the end of the year, ethereum’s skyrocket at the end of the year, the bitcoin cash fork in August, and something else skyrocketing that I won’t mention, my portfolio growth for 2017 was… 122%. Yeah. The interest on the portfolio alone more than doubled the entire value of the portfolio.
I realize that many people won’t believe that number, but I promise you, that’s the number. I triple-checked it in my primary investments spreadsheet. I have a hard time believing it myself. And before you ask, no, that’s not including the new cash I added the portfolio this year. If it sounds hard to believe, let me clarify a few things:
- When I say “my portfolio,” I’m not talking about my entire net worth. I have cash reserves, savings accounts, gold, real estate, and the value of my businesses that I do not consider part of my investment portfolio. So I’m not saying my total net worth went up by 122%. I’m just saying that of a segment of my investments I consider my long-term investment portfolio. Most of my cash and gold I consider mid-term savings or emergency savings, and real estate I keep separate.
- That being said, a significant portion of what is in my portfolio is cash. Not most, but a lot. And yes, even with that cash sitting at zero percent growth, the total return on the portfolio still went up 122%.
- As usual, for security and legal reasons, I can’t and won’t tell you exactly where my money is invested in, but to give you an idea of what happened, my bitcoin went up in value over 330%, my ethereum 150%, my bitcoin cash infinite percent (I’ll explain that in a minute), something else went up 34%, and something else went up 19%. My cash (obviously) stayed the same, my gold stayed the same, I lost -3% on my silver, lost -7% on something else, and just about everything else about broke even for the year.
- Bitcoin cash, for those of you who don’t know, is not bitcoin. In August, bitcoin went through a “fork,” where everyone who owned bitcoin instantly received an equal amount of bitcoins in bitcoin cash, which is a new type of bitcoin. Initially, when this happened, bitcoin cash wasn’t worth very much. However, by the time my bitcoin cash vested and I took possession of it in mid-December, it was worth around $3000 per bitcoin. I quite literally woke up one morning with thousands upon thousands of dollars in my new bitcoin cash wallet. I seriously thought it was some kind of mistake before I realized what was going on. The return on this “investment” was infinite, since I invested zero dollars to make this money; it simply cloned my bitcoins. Very nice.
- I’ve already pulled out my initial investment for both bitcoin and ethereum once they both doubled, plus a healthy profit. This means that if bitcoin and/or ethereum (or both) go to zero tomorrow, I will have still made money, and any new returns as of late last year are effectively infinite (since again, I invested none of my own money to make these returns).
Just like I said in September, I’m under no delusions about these high returns. I realize this was an odd year, and I don’t expect to make returns on this in 2018, and I don’t think I’m some kind of investing genius. I’m just a guy who did a lot of research and had a few of my speculations turn out correctly. Perhaps in 2018 I may lose a bunch of money, or do okay but no where near 122%. I guess we’ll see.
As I’ve also said before, If I’m able to make really good returns three years in a row, I will consider myself “onto something” instead of just being a lucky guy in the right place at the right time, and I will write a book about what I did. At the moment, one year is not a track record, although I have still never lost money in my portfolio. However, that trend can’t continue forever now that I’m speculating.
Lastly, will repeat that I’m only speculating with a small percentage of my overall net worth, which is what I recommend you do, if you want to speculate at all. Only speculate with money you can afford to lose, that won’t negatively affect your long-term financial goals. The vast majority of my net worth is in very normal, boring stuff, and will remain so, regardless of how exciting things like bitcoin or whatever get.
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Do you think it’s worth buying a tiny stock of bitcoin, like let’s say $100-200 to kind of get my foot in the door.
I used to think that a person could only buy an entire bitcoin to make an investment but i was showed otherwise early last week.
I would only want $100-$200 b/c I’m still working on raising my income. Do you think it’s worth it?
Sure, it can’t hurt, but don’t expect to ever make a lot of money on a $100 investment. Even if it quadruples in value someday, you make just $400. Woop-dee-doo.
Correct. You can buy one penny in bitcoin if you want. That’s one of the beauties of bitcoin.
And I definitely appreciate the intellectual honesty!
Very good point. Always important to remember, and more so in a time like this.
Interesting read, thanks for sharing.
Could you write something about the means/tools you use to manage your portfolio? Your vehicle for investing and speculating. I assume you’re using some sort of investment platform site (as opposed to e.g. day trading apps), but how did you went about deciding what to go for? I’m asking as a total newb who hasn’t gone beyond typical saving accounts and now is looking into investing/speculating for the first time. Thanks.
I keep it very, very simple, but sure, that’s a good idea for a future post here.
Can you share some info about time blocking? I read your other post about your week, but Do you have specific time slots that you focus on different businesses? Or is work time just work time? I keep planning to work on my passive idea on weekends, but if the main business spills into weekends, i dont do shit that week. Also, do you find that business A suffers if you work on ramping up business B?
At this point I dont believe in Bitcoin anymore. Too expensive transactions and there have been much more growth in the past already and have much better future ahead for the other cryptos. For example look at how ripple or ether have been doing over the last weeks. And in many cases the transactions are free or near free and much faster. This can be important depending on what you do with it or in case you need to withdraw fast. Of course if you want to buy stuff with it bitcoin is still by far much more accepted than all the other ones combined but its changing.
An interesting crypto is Neo. The transactions are free and there is no mining. Instead owning the crypto means you own section of the blockchain and you get paid dividents. The return is about 5% per annum at the moment which isn’t that impressive but thats on top of the speculative value of the coin, so not bad.
For gold I am still undecided what is the best way to own it. Probably a combination of different things. I also strongly believe in palladium, platinum, rhodium and lithium future wise. But I guess I just love metals in general. They are nice and shiny.
I have also made some money on cryptos to the point i could pull out the money I invested back into “cash” and what is invested now is purely profit. I will probably reinvest the money I got back, but not sure into what, probably some more boring investments like metal ETFs and stocks. For these things I am still unsure which brokers to use. Ideally Id like to use a broker based somewhere far away like east asia but those I find difficult to get an account with. The easy local brokers are mainly doing local stocks which isnt really what I want and then there is the anonymity issue.
Don’t short US-(somewhat related) yet, Caleb.
..at least not in near term horizon.
*)I know there’s an urge to see validation of our own hypothesis ASAP.
It’s just work time, but I categorize my work time into about eight different categories (email time, client time, development time, etc). I don’t break it out by company though.
Then you must set weekly minimums on when to work on your passive idea, and then make sure you do it every week. For example, “I work on my passive idea at least 3 hours per week,” then make it happen.
Not without my consent. I will often purposely spend less time in business A so I can spend more time in business B, and so on. Then switch back later.
I have a lot more to say about this later. Stay tuned.
Very good, I am very interested in time optimization and efficiency as well as avoiding procrastination.
Is it bad that I’m kind of hoping for that, so I can buy it when its stupid low? lol
Yeah its the decelopment side of business thats no fun, and gets pushed on the backburner for me. Ill have to just man up and officially start writing it into the thanks!
What if you buy when its low but it keeps going even lower? Or what if you buy now and it keeps rising even more?
I think best approach is to have a diversified portfolio even within an investment type and then its youre covered, more or less. Of course you will make less profit, but I have been doing this with cryptos partly to lower risk and partly because I really did not know where to invest most of the time and I have seen a consistent steady growth on my portfolio over time. I did not get any crazy returns with one exception but the growth over period of time has been pretty good.
And dont be so stuck up on bitcoin (or even eth), you can make bigger profits on near daily basis on many other cryptos.
And youll never get it out of your wallet, with the transaction costs starting at around 10 euro per transaction.
I have something coming in a few months that will blow everyone’s mind.
Yep. My ethereum is going crazy right now. Love it!
Uh, no. I have no idea what you’re talking about. And if you live in a country that is actually doing this to everyone, it’s time to move.
This is the blockchain cost of sending bitcoin. Other cryptos are way way cheaper, some even free. This has nothing to do with the country and there is no way for a “country” to do anything with this, at least with current tech.
Then explain why I just did a bitcoin transaction this morning and I didn’t pay anywhere near 10 euro for the transaction.
The costs vary depending on how busy the blockchain is but its around that amount on average. Depending on which wallets you are using they might not tell you about it so you just send your bitcoin somewhere and blockchain deducts the cost from the amount you send so usually you just have a bit less in your destination. But some wallets allow you to set a mining cost, so yes its possible to have it much cheaper even for bitcoin with low mining costs but then confirmations take very long time.
BD, just remember that inevitable (as the coming crash is) does not mean imminent.
No matter how certain the future crash is, that doesn’t mean it has to happen right away. Sometimes, it’s quite the opposite.