Not financial advice.
Equity Portfolio Breakdown
Blue: Current value as % of my portfolio
Orange: Cost as a % of my total cost invested into equities
I don’t have a hard rule on % cost allocation on stocks nor a threshold where I will trim them. This chart simply shows the divergence between my investment thesis and the market expectations of the company. It’s also a decent visualisation of my portfolio holdings.
**Cash not included in this chart.
Equity Porfolio Performance
Time-weighted returns (IRR):
CAGR Performance*
*Note: Brokerages and most investors use IRR (time-weighted returns) as that is what most platforms provide. Practically speaking though, you’d want to know what 1$ of your investment (if all invested since inception) will be worth today. It’s a crude metric, but to everyday people, this is more relatable (since if I liquidated my $1 portfolio right now, I’d get $1.48 over my total cost invested). Still pretty good for 21 months.
IRR stats:
Portfolio Changes
Bought: $DNA, $TWLO (x2), $MP, $SNOW
Trimmed: $NET
Crypto Porfolio Performance*
*Multiple is expressed as: Total crypto assets / Total cost into crypto. The last time I added real-life money into crypto was in July 2020. My starting point for comparison (being conservative) hence will be start of 2020. Portfolio breakdown will be fleshed out in the crypto section. I’ve included an index to track (assuming if I invested all my cost into BTC and hodl) my active investing performance in crypto.
% of Net Worth (exclude fixed assets) in:
Stocks: 19%
Crypto: 76%
Portfolio Commentary
October is by and large a good month for me. However, since bad experiences outweigh good experiences by at least 1 (or more depending on your emotional discipline), I tend to remember prices with red days across the board more than prices where my portfolio is green. That’s irrational.
Though, I think its safe to say that October’s seasonality holds true for growth stocks… until treasury yields come to party. It’s quite apparent that lower yields translate to higher prices (and thus valuations). This is obviously notwithstanding the effect it has on analysts’ Discounted Cash Flow (DCF) models that uses interest rates to discount future values back to present value. The lower the rate, the higher the present value (my brain seems to agree with the math).
Since March 2020, growth stocks have experienced multiple expansion. While we can also argue that much of their businesses have been improved for the better (and even transitioning into hhhypergrowth - hat tip to Muji who I deeply respect for SaaS info. He also runs a premium newsletter delving into the tech behind these company, of which I’m a paying subscriber), we can also see that such stock returns are normal. Submitting evidence 1 of 92840, your honor:
$NET experienced a 80% gain from just October alone! By the way, $NET is one of my top 3 positions both by market value as well as cost. Is the gain wholly due to business improvements, or multiple expansion? Chances are, its skewed towards multiple expansion. While bulls will argue that the intention of Cloudflare as the 4th public cloud (which btw just brushes aside Alibaba cloud; found that quite amusing), the valuation rerating seems quite drastic.
As mentioned above, I sold about 1/9 th of my position in $NET at $169.5, and so far, I’ve been proven wrong & markets will continue to stay irrational.
While there’s a probability that markets (and my portfolio will move up from here), by definition, returns you receive now are simply returns you will receive in the future, pulled forward.
The more returns you get now, the less returns you may receive in the future. Can Cloudflare head to $250 in this bull market? Unlikely, but it’s not impossible.
As investors, we have to constantly weigh the trade-offs of our incremental dollar. Yes, we can’t time the market, but it doesn’t mean you keep adding to your position at all-time highs. With multiple expansion and yields unlikely to go lower even further (can’t go negative as policymakers do not want to do that), it may be that yields start rising in anticipation of Fed’s tapering, which will impact valuations.
In any case, I have no blueprint for what to do next. I am a simple investor. I see a dip; I buy. With earnings season here, I think markets will punish companies that seem way too frothy, and reward companies that seem appropriately valued. OR they (retail mania) can simply bid the asset up anyway.
Nobody said investing was easy.
It’s no wonder investors have been chirping about since H2 2021 about persistent overvaluations and that this time, the bubble will pop. For a more egregious display of current multiples (SaaS companies specifically), look at Jamin’s clouded judgement newsletter here. It’s a good weekly update on the frothiness of the companies in there, many of which I’ve invested in. I’ve taken 1 chart from it to highlight below.
Elsewhere in my portfolio, Sea Limited’s ($SE) venture arm, Sea Capital has participated in a funding round for leading crypto exchange FTX. Notably, FTX raised 420.69 million from 69 investors in their Series B-1 round, including Temasek.
Nice.
On top of the B-1 fundraise, FTX disclosed that Temasek had also participated in the previously announced Series B round, updating the total amount of that raise from $900 million to $1 billion.
I think as an investor in both (FTX via pseudo exchange token, FTT), I am pleasantly surprised by Sea’s (& Temasek’s) involvement. Sea has also made rounds across FinTwit bulls by starting online presence across Europe as well as India. Suddenly from South East Asia and Latin America, Shopee wants to take over the world. This puts $SE firmly in the growth stage, perhaps negatively impacting their bottom line further for the foreseeable future. This will be an interesting Q3 earnings to review their performance.
Ginkgo Bioworks ($DNA) also experienced its first short seller research report that momentarily caused a brief dip back to $9-ish area. I think the report came at a time where valuations are frothy and took advantage of it. From the feedback of some FinTwit people I follow that are more in tune with the name, its merely an exaggeration of the current state of affairs; Ginkgo takes equity in companies that want to use their services. In that sense, its sort of like a venture arm that will also enjoy better returns if their customers eventually become successful and sufficiently large. All eyes are currently on their next earnings where they will hopefully beat expectations, which are sky high at the moment.
Having trimmed some $NET, I wanted to add to my existing positions. Snowflake ($SNOW) was one I wanted to make it a full position faster due to my conviction. I also thought MP Materials ($MP) was a decent add ahead of earnings where I don’t foresee demand slowing down for NdPr magnets (which is used in wind turbines and EVs). 15% of world supply in 2020 speaks volumes + only such mine in western hemispehere (?) and in US (backing from DoD). Talk about bad timing; I bought the stock at 1030PM. A short report came out at 11PM and it tanked 10+%. I have never been so lucky (?) in my investing life.
Unlike other substack writers, I don’t like to write about company happenings over the month as it can get really difficult to track. There are writers who already do a good job, and so I wouldn’t do repetitive work just to publish content that’s a regurgitation of what can be found online.
My last update before I move onto crypto is that I have also been DCA-ing into $URA (Uranium exposure) as well as $IXC (Global Energy ETF). I think Uranium easily ranks as a top 5 for brainless investments. The world can never brush away nuclear as a clean and energy dense (as in unit of material required for 1 gWh equivalent) that trumps all other forms of sources. Check out Lyn Alden’s article on it (long read warning). It’s sort of borrowed conviction but her article made me understand the investment thesis behind energy.
It’s not included in my equities portfolio as I used a different brokerage to buy it. Cost basis for $URA is ~$22 and for $IXC is around $27. I plan to keep allocating sums of money into this periodically.
Useful links
Earnings review: I write Twitter threads evaluating the earnings of my portfolio companies, focusing on their earnings call.
Q2 2021 review of my portfolio companies
My September 2021 writeup. This can also be found on my website, where I store all my past articles and threads on crypto and stocks.
Dropping an interesting thread for your reading here…
Crypto
I must admit, the launch of the Bitcoin ETF has turned out to be a sell-the-news event, and while I understood that futures-based ETF will always underperformed spot exposure, I may have been over-bullish in crypto for this month. This is after Bitcoin rallied from 43.8K to 67K in just under a month. Everybody and their dog (woof) was getting long Bitcoin and on L1 chains (beta to BTC). The ‘break’ to 58k was a well-deserved breather, though it wasn’t fun since I was fully invested (and mainly in alts).
It’s a decisive investment choice on my part. Even as I talk about being there when BTC crashed ~50% from 6k to low 3ks, it never feels fun experiencing a 10+% haircut in an intraday crash. This hurts even more as I’ve grown my crypto portfolio to quite a sizeable amount relative to my stocks and my “expected” net worth for someone my age.
Then, I stumbled on this thread, and it got me thinking.
What is my exit plan? What are my goals? I haven’t actually given a serious thought onto this besides the usual investment outperformance, which has long been my investment objective. How much is enough, though?
Over this month, I’ve the opportunity to catch up with some of my friends back in reservist (conscription is compulsory for Singaporeans; reservist = yearly trainings to refresh military learnings). The talk was overwhelmingly about adulting: Buying a house, weddings, and the generic starting-a-family conversation.
Let’s not forget, buying a house in land-constrained Singapore is literally the largest purchase a couple will probably make in their lifetimes. A 990 square feet near to public transportation (aka MRT stations) cost around $600-$650 per square feet. The kicker? The house is essentially a 99-year lease from the government, and prices generally exhibit a decaying function that is exponential as the lease decreases.
Weddings, depending on how ‘asian’ your family is and how ‘grandiose’ you want to this special occasion to be, can easily cost 50k after proceeds (as wedding gifts we generally gift money based on publicly available per-table prices of the location).
This got me thinking - where are my crypto take profits? How far and how long am I willing to invest in crypto? 5 years? 10 years without selling? Bear in mind, my last contribution to crypto was in July 2020. Should I take out some money, in anticipation of big ticket purchases for me and my partner? Is my existing cash flow sufficient? Many questions that require a deeper and more thoughtful reflection than just ranting my thoughts on substack (though, I genuinely appreciate you reading. It means a lot that you want to join me on my life (and investing) journey).
Enough talk about me, will delve deeper into my holdings and movements below. 👇
Crypto Portfolio Commentary
Over the past month, I was trying to aggressively position for the upcoming Q4 2021 / Q1 2022 play, where I anticpate to be Bitcoin heading to $100k and L1 chains being way higher than they already are now. Nobody knows what will happen though.
Bitcoin’s futures-backed ETF ($BITO and $BTF) was also a decent success with huge volume. Finally, a way for other investors previously restricted by regulations to be exposed to bitcoin. Take a look at this chart from coinshares’ weekly report (ending 22nd October). I expect the trend to persist for the week ending 29th October).
Of course, the bulk of this was due to the ETFs being listed. But, this tells you just how much money is eagerly awaiting such a product. I will leave you to draw your own conclusions.
My portfolio has been simplified as below. The only adds for October was in BTC and Luna. Note that this represents the market value of my portfolio, and not the costs that was invested in each position. I will share the full list of tokens I’ve invested (aped) in at the end of this topic (NOT FINANCIAL ADVICE) for transperancy.
Past readers will remember I had many more Solana L2 tokens (under the category (Others-SOL). I basically re-evaluated my bullish positions on such governance tokens (e.g. RAY, COPE, and other smaller ones). I felt that value will accrue to L1s first, and that governance tokens in and of itself, represent no utility. Furthermore, the tokenomics of such tokens are that they have very, very high inflation rates. High APYs represent good yield for the degen farmers. Sophisticated farmers would short the asset on say FTX to remain delta neutral; rewards are immediately sold. I also wanted to consolidate my L2 tokens in the Solana ecosystem. Solana remains a key ecosystem which I’m heavily involved in, and am most bullish on.
I also favored the potential of Terra (Luna) as an up-and-coming L1 that should be on par with Solana, especially with its algorithmic stalecoin that is quite frankly, well designed. Furthermore, there was talk of many protocols waiting for the Columbus-5 upgrade before launching on the Terra network. They have also listed multiple proposals to burn the supply of tokens, which are generally good for price. Ecosystem is strong and so is the demand-supply imbalance. I’m long. :)
Like Solana, I’ve also compiled a meta-thread of resources for #LUNAtics :)
The top 4 of my crypto positions by costs (not in order) are:
BTC, SOL, LUNA, FTT
FTT represents a pseudo-ownership in the exchange, FTX. This token, unlike other governance tokens, has actual utility. Oh, and it also burns a portion of their revenue. Talk about stock buybacks. Essentially, if FTX becomes a top-tier exchange for retail investors similar to Coinbase, you can expect a positive return on owning FTT simply by its buy-and-burn mechanism. Read their explainer here.
Essentially, I am rebalancing my portfolio for what is coming. It has become a seriously large amount of capital, and with great capital come great responsibility steward it to potential financial freedom, whenever that may be.
On the NFT side, I think my ventures have largely been a miss. Floor prices of my current NFTs have been cratering, and it is perhaps due to the power law that also exists in the NFT space. Simply put, over a long enough period of time, only a select few NFTs will survive and thrive out of all the thousands of NFTs listed in a particular L1. My main NFT plays are on Solana. If most of my NFTs go to 0, I have made my peace with it, and will display it on top of my tombstone in the metaverse. 😂
For speculators wanting to flip NFTs for a profit, I have no advice to give but to be early. Chances of a floor at least 1-2x higher than mint price is quite common but some tech savvy-ness (regarding smart contracts and RPC nodes) is required to be able to mint successfully. Good luck!
Yield Farm developments
The trade-off between yield farm and holding spot token is one that investors must definitely consider, especially in this bull market. Here’s a thread explaining why yield farming may not = passive income. After my forays into liquidity farming, I am coming to terms with the risk. Take a look at the thread below.
The returns will be highest (due to emissions and fees) if the price or underlying price ratios stay constant (aka ORCA/USDC stays at ~$X forever). With alts (& their volatility), impermanent loss will come back and bite you to say the least.
[Solana]
My spot tokens are farming yield at ~10% on Sunny (which aggregates yield on Saber). The emissions will likely trend down, as will the price of Sunny governance token. As above, governance tokens without utility are essentially worthless. I’ve seen the price of $SUNNY spike to ~0.2 all the way back to ~0.03. Since there’s no impermanent loss on the pairs (cross-chain liquidity, hence a lot of wormhole - native token pairs), I am comfortable with putting my spot tokens (SOL, FTT, SRM) there for yield.
When there’s a yield, there’s a way.
I’ll also make it a point to convert the rewards to USDC as sort of a passive income. A lot has changed with my other farming activities as I looked hard on my Solana L2 tokens. As such, I’ve removed my Raydium from their staking platfrom, and sold them.
I’ve also removed my liquidity from the Orca pools. Even with triple-digit APYs, the volatility of these coins will eventually contribute the pool’s impermanent loss as the coins can drop (or rip) 20% or more in a day. Furthermore, I’ve not done deeper research on the coins I am farming; conviction is low. If there was to be a bull market, my holdings should ideally be in the spot tokens I feel most confident about (which I’ve stated above).
I am still maintaining my leveraged farming position on Solfarm (rebranded to tulip garden). Having started with a high $ORCA price of $17.73, the sudden crash to $8.68 felt like I was kicked in the stomach repeatedly. However, as long as the kill buffer does not reach 0, my position won’t get liquidated. Thankfully, with well-timed additions into my position, I managed to bring my cost down to $13.3.
I will keep this farm running for as long as I can (as an experiment), but that is very much dependent on the downside volatility of $ORCA.
Position value: $2050
Position cost: $1000 + 200 + 200 + 350 + 350 = $2050
After a long month, I’ve finally broke even… 😅. Let’s hope November will be better.
If you’re interested in the Solana ecosystem, do check out this meta-thread where I collate helpful guides and resources on Solana.
[LUNA]
I’ve put my LUNA in as collateral to loan some UST to put in a simple Anchor savings account yielding 20% annual rate. There’s also some way to juice it up to 160+ APY?!
All risks are your own, please do your own research.
If you’re interested in the Luna/Terra ecosystem, do check out this thread.
[Binance Smart Chain]
The USD position in tranchess was liquidated so that I can add to my existing crypto positions. The reward tokens are still locked there (~180 CHESS) until March 2022, so will just bag hold till then.
[Avalanche]
Similar to Raydium on Solana, staking $XAVA provides early allocation in IDOs happening on the Avalanche ecosystem. It also provides a nominal 2% APY as rewards. The past IDOs that took place on the platform:
Current prices
Oh! Finance: $0.081 to $0.4438
RocoFinance: $0.12 to $4.29
HurricaneSwap: $0.03 to $0.2671
Kalao: $0.04 to $1.32
🤯 A 5x in Oh! Finance, and ~33x in Kalao…?! Fk.
When I discovered this, I think it was already mid October. For XAVA stakers, you are eligible to purchase tokens during the staking round.
I balked at the 2AM timing as I thought it won’t be as successful (in price appreciation). I was obviously wrong. You can be sure I will wake up at 2AM on a weekday just to ape a few hundred into these IDOs for the foreseeable future.
Absolutely not financial advice.
Besides this, I am also involved in the xJOE single-sided staking.
Other, more degenerate pools are TIME (wonderland.money), as well as Smartcoin. This is absolutely not financial advice. Only put in what you can afford to lose.
Compass Mining
I was eagerly anticipating my miner going online by Oct-31. This date was repeately touted (confidently, if I may add) by the team to be when all miners affected by the South Carolina delay (my 1x miner originally for Sept-31 at facility A @ SC was delayed as A was not ready to host miners yet). There were already strong doubts by the community that the team can meet the timeline and indeed they were right.
Essentially, it meant a maximum of 3 weeks delay on 2x miners (I bought 1 to go online in Oct-31). Meaning these miners will go online on 7th to 21st November. There was naturally, a ton of backlash as promises were broken. For me personally, I think the opportunity cost is not as big (as only 2 miners) but always better to stack sats earlier than later. My dream of a bitcoin mining empire will just be delayed further. :)
Will provide updates on Twitter when it does go online, and a subsequent bi-weekly update after that!
My crypto positions
By themes (Not in order of Market value):
L1s & Large-caps: $BTC $SOL $FTT $LUNA $AVAX
Solana eco: $SRM $COPE
Avalanche eco: $JOE $XAVA
Gaming plays: $PYR YGG $PMON
Degen bets / tokens earnt from yield: $GB $TIME $SMRTr $KDA $ANC $CHESS $BTT $SPELL
Compass Mining (Capital Expenditure): $BTC (as miners will be used to mine bitcoin).
I will keep repeating: NOT FINANCIAL ADVICE.
Conclusion
Thank you for reading thus far. Crypto operates on a super-fast timescale. 1 month in the crypto markets seems like 1 year in the stock market. It can be quite tiring to keep up of both crypto AND stocks. The sprint to Q1 2022 begins…
If all goes to plan, hopefully this time next year I will be one step closer to financial freedom (or whatever my long-term crypto goals will be). Till then, I appreciate every single one of you who read this and felt like they were joining me on this once-in-a-lifetime journey. If any of the info and readings helped you in your own investment journey, I will have not written this in vain. 😊
Cheers,
Joey