A significant 2017 booster for the Dalio portfolio in 2017 was the 40% he has in 30y bonds. TLT returned 8.7%. It remains to be seem how smart that strategy is. I'm not as bold as he is at this point in the cycle, especially with cash yielding 2% (1-2y bonds). I rather sit on that than TLT
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Global Macro Trading Journal
- Thread starter Daal
- Start date
Looks like my hypothesis that cryptos are a bubble on fast forward is being proved incorrect. If that was correct, this market would have died after the BTC pullback from 19k down to 10.5k and then to 16k, which then corrected to 12.5k. IIRC, that happened right before christmas night. In the bubbly/speculative markets that I play, this is an very reliable pattern that signals the end of the move. Namely, a parabolic move up, and large decline and then a nice rebound that fails (the 16K move down to 12.5K). Except BTC caught a bid there, ripped back to 17k and now is chopping around (and the way its trading, in a very orderly manner, certaintly doesnt feel like its going to crash and implode). But more importantly, all the other major cryptos have since then recovered quite well and a lot of them made new highs.
Its odd because other bubbles dont behave in this manner, at least in terms of price action. They dont go up this much, they dont produce so large of gains to people. But this one does. At this point I'm open minded to how long this will last, maybe its another week, maybe its another 2 years. I dont know, I'm going to try to implement strategies that are robust to either scenario
Its odd because other bubbles dont behave in this manner, at least in terms of price action. They dont go up this much, they dont produce so large of gains to people. But this one does. At this point I'm open minded to how long this will last, maybe its another week, maybe its another 2 years. I dont know, I'm going to try to implement strategies that are robust to either scenario
When bitcoin is a novel product, we are not able to understand its behavior in the market, obviously this is not a bubble, as some believe it is. What there is now is strong pressure from the big banks to stop their momentum because they feel threatened to lose the status quou, this is more than the price of an action at stake
The more useful bitcoin is (that is, the more real the technology) the more likely it is that its already or it will become a bubble. I just don't believe people will fairly price BTC all the way up. People will overshoot, as they often do. Its a new technology, it can change the world, its hard to value (so its hard to get people to realize their mistake), its not that liquid (vs world currencies, bond and stock markets). Its a perfect enviroment for a bubble EVEN if the technology is revolutionary (heck, specially if that is the case)When bitcoin is a novel product, we are not able to understand its behavior in the market, obviously this is not a bubble, as some believe it is. What there is now is strong pressure from the big banks to stop their momentum because they feel threatened to lose the status quou, this is more than the price of an action at stake
Thats why I think this technology is real but its (or it will become) a bubble anyway
That said, I do have been making a lot more of an effort lately to understand the technology better. I'm even planning to write some simple applications for ethereum. I want to understand how this all works at a deep level. This will help me pick ICOs as well as understand news, catalysts and how to price these coins better (and I'm using the word price because its very hard to value them but its completely possible to price them, to understand the difference, I would recommend watching the Damodaran videos on youtube where he talks about that)
Daal I understand your point, and it is sensible that you first think about how things work in order to give it a fair value, but while doing that, what we are in the game is trying to make people see the implications of bitcoin in all sensesThat said, I do have been making a lot more of an effort lately to understand the technology better. I'm even planning to write some simple applications for ethereum. I want to understand how this all works at a deep level. This will help me pick ICOs as well as understand news, catalysts and how to price these coins better (and I'm using the word price because its very hard to value them but its completely possible to price them, to understand the difference, I would recommend watching the Damodaran videos on youtube where he talks about that)
If BTC were at 2k, I would big on it. It would be a huge bargain. The market cap would be $34B, that compared to $7.5T in gold. One of my key trading and investing principles now is the authority of payoff matrixes. If BTC were to take 5% gold market to itself, it would be worth $375B. So essentially, you would be getting 10-1 on that outcome.expect btc to go down to 4k at least....probably then just go to about 1 or 2k which is what it's probably worth.
At 10-1 odds (or better in case of a upside surprise, so extra optionality) I no longer pay attention to my 'theories' or beliefs, I just go with the numbers. Especially in long investments (which have the $0 bound limiting your risk) with unlimited reward
I would encourge you to think about adopting this to your own investing, taleb is a douche but he is dead right when he says that "understanding is a poor substitute for convexity", he's got a good piece with that title somewhere on the web