BRED

May 07 2017

A Five-Month Buy-and-Hold Strategy to 10x Your Money

It’s been a crazy weekend on the cryptocurrency front. If you checked in on the markets on Poloniex, as we did earlier today (around 11:30 a.m. Central Time in the US), you would have seen something that looked like this:

This snapshot (from the BTC “pairs,” so the prices of, say, XRP are calculated in BTC) tells us that you could have done well on a 24-hour period taking the list of 25 of the top “altcoins” and throwing a dart at their names, buying some and then selling 24 hours later. (The obscured 93.76% gain was from STR – “Stellar,” and the 100% gain near the arrow in the picture is BCN – “Bytecoin.”)

But What About…A More “Strategic” Approach?

Oh, that. The BRED Portfolio. The one we seem to be prattle on and on about. The one that involves a $10,000 investment, spread equally between four of the biggest coins – Bitcoin, Ripple, Ethereum, and Dash – and invested on January 1, 2017.

That one.

How is it doing?

Sweet Mother of Zeus!

$10,000 invested in the BRED Portfolio on January 1, 2017 would have grown to $106,909.51 on May 7, 2017.

Okay, so there’s some hyperbole involved here. Actually, quite a bit of hyperbole: this is a hypothetical case. If anyone out there actually did this AND wants to talk about it, the floor is yours.

Because, let’s face it, investments come with inherent risks, and with that thing called “human nature.”

Story Time

I remember back in the first dot-com boom, and specifically a stock that I owned in my IRA that was poised to change the world. For a while, it did – acquiring others in its nascent space, growing like the proverbial weed. My memory is deliberately a little fuzzy on the exact numbers, and I have since shredded all records of my transactions.

But suffice it to say I may have bought into this stock at around 3 bucks a share, and it went to around 78 a share.

And I held – “HODL” is the acronym that could have best described what I was doing with this one – until the last possible moment.

PSINet was the company. Yeah, that was a learning experience for me.

It Comes Down to ONE WORD:

Fundamentals.

You can certainly believe that Bitcoin, Ripple, Ethereum, and Dash all have the potential to change the world. It is quite possible that they could. It is quite possible that we’ll watch them grow by another order of magnitude. It is quite possible that they’ll continue growing like this, and the ramifications for the global economy could, indeed, be huge.

On the other hand, it is quite possible that we’re watching a bubble that’s about to pop. That Bitcoin is as overpriced as some say, or that there’s too much XRP being circulated.

Our advice: check the fundamentals. Spread your investments around – which is why we say “BRED Portfolio” and not just Bitcoin. Consider the Hedge Fund approach we talk about here.

Due your due diligence, too. Seek advice from places beyond just this site – you’re doing that, right? – and talk to investment advisors and professionals.

Could the trend continue? Could these coins come back to earth? We’ll all find out soon enough.

May 02 2017

Your Own Bitcoin Hedge Fund

If you look around the internet, you can find quite a few investment funds that aim to capitalize on Bitcoin and emerging blockchain technologies. However, it’s awfully tough to get into them: you’ve either got VC (venture capital) funds that rely on high-net worth investors for their capital, or you have hedge funds that are out of the reach of most mere mortals. (And they don’t really invest in Bitcoin and altcoins yet; thanks in part to the US SEC requirements around funds.)

Then there are the ETFs that we keep waiting for the SEC to approve, as well as the mutual fund industry: do you think they’ll jump into the pool yet? Probably not.

So, what’s an investor to do?

Easy: start your own Bitcoin Hedge Fund.

Okay, a few caveats first: we’re not investment advisors, we’re not registered with the SEC or FINRA. This is not individual investment advice. Use and follow at your own risk. Seek legal, accounting, and other individualized assistance before investing.

Now that that’s out of the way, let’s begin.

It’s not REALLY a “Hedge Fund”

That’s right…we’re not actually advocating starting your own “Hedge Fund.” We are advocating starting a fund that “hedges” against ebbs and flows in the overall markets.

This is akin to the precious metals people – the “gold bugs” – who claim that you should have somewhere between 90 and 100% of your money in gold. (That’s a joke: some experts, though, will tell you that you’ll miss out on the potential for explosive growth unless you have 10-20% of your money in gold, silver, and other tangible assets.)

AND the other important part of this equation, which the gold bugs will tell you over and over again, is that you want something outside of the US Dollar in case things hit the fan.

Bitcoin and cryptocurrencies might help you there, too: since they’re outside the US Dollar, they’re also a tremendous way to avoid having to worry about whether the dollar fares well against the Japanese Yen or the Euro.

Your Own Hedge – Gold, Crypto, Whatever – How Much?

Now we get into your own soul searching. You need to figure out what makes you comfortable. (We realize that a good chunk of this is counterculture stuff – if you walk into your investment advisor’s office and say “I want to put 10% of my retirement in Bitcoin,” they may look at you as if you have three heads.)

So we’re going to create a hypothetical character – “Herbie Hedge,” who, though conjured out of thin air, does not have three heads – and we’ll manage a hypothetical fund on Herbie’s behalf.

Hypothetical Investments

To make it easy, we’re going to say Herbie has $100,000 to invest, and the OLD Herbie – as of twenty minutes ago, before he read this post and decided to create his hedge fund – had his liquid-ish investments (stocks, bonds, mutual funds and cash – since they’re between ordinary investment accounts and IRAs, 401(k)s and the like, we’re calling them “liquid-ish”) distributed like this:

50% S&P 500, DJIA Index funds (or, 50% in an overall stock portfolio that looks like the overall market)
20% Growth, international, value, and the like
20% Bonds
5% Gold, silver, precious metals
5% Cash and cash equivalents.

Pretty simple, right? And he was planning on leaving it there. But now that he’s taken a look around this site, and maybe he’s learned a little bit about the “BRED Portfolio” and the “Coins that May Quadruple,” he’s ready to re-consider what he’s doing long-term. Plus, there’s FOMO to worry about: what if this Bitcoin or these other altcoins or cryptocurrencies really do take off?

Speaking of FOMO, didja see what the BRED Portfolio did over the first four months of the year? Whoa.

Herbie’s Hedge Fund

First up, let’s re-distribute his portfolio, the $100,000 he has to invest.

Let’s say Herbie is still a believer in the overall market, might think he can lessen his reliance on bonds, and wants to keep a little in gold and precious metals. BUT he’s also ready to jump in with both feet – to a certain extent – and invest in Bitcoin and its ilk.

We’ll redistribute his (hypothetical) portfolio like so:

40% S&P 500, etc.
20% Growth, etc.
20% Bonds
10% Herbie’s Hedge Fund
5% Gold, etc.
5% Cash, etc.

Voila, Herbie is ready to invest $10,000 in his very own hedge fund.

A Visual “Map” of Herbie’s Hedge Fund

The way we’d propose setting up this “hedge” fund shouldn’t be a surprise to readers of this space.

Bitcoin is there because, well, duh. It is the centerpiece of this new economy. It’s the one that started it all. And, not only do we recommend it in our BRED Portfolio, we also recommend it as one of those four coins that could quadruple. (Yes, we like linking to our own content multiple times in the same post.)

The next 30% is comprised of the other three coins in the BRED portfolio: Ripple (XRP), Ethereum (ETH) and Dash (DASH). To keep it simple, let’s do 10% of our 10K in each.

Following along, let’s aim for the mid-tier: semi-established coins with semi-large market caps. 10% each in Litecoin and Dogecoin.

Finally, there needs to be at least a little that aims to take part in the explosive growth of (some) ICOs and brand-new or new-ish coins. We’re setting aside 10% for two of those: Digibyte and Trustcoin.

Here’s the result:

We grabbed the values from Coinmarketcap, it’s denominated in US Dollars, and of course its value will fluctuate. Heck, as of this writing, Bitcoin was on a mini-tear and was trading – depending upon the market – between $1450 and $1600.

What if I don’t like these individual coins?

Here’s where we go back to the old saw that we don’t provide individual investment advice, trust the professionals in your circle, and past performance isn’t indicative of future results.

But again, let’s go back to why hedge funds were created: the market ebbs, and your hedge fund flows. And vice versa. You’re going to see results that run counter to the results in the overall market – within reason – and that’s okay. Also, within the individual fund, you will see some altcoins do well and others not so much. So if you don’t want to hedge your bets with Digibyte (which I’ll admit didn’t pop like I thought it would after the Segwit rumors and Segwit news), research another coin.

The goal is to spread your risk overall – remember, only 10% of our liquid-ish portfolio is in this fund – and to spread your risk within the fund itself.

What if I don’t have $10,000?

No problem – actually, the beauty of Bitcoin and cryptocurrency investment is that you can get started with very little. (This is a great time to remind you that you can get started over at Coinbase, and if you use this link and make a qualifying purchase, you get extra Bitcoin…and so do we. So yes, that’s an ADVERTISEMENT.)

So you can borrow liberally from our approach with whatever amount you think makes sense. $1000? $100? Test it out over time, see what happens.

What we’ll do here…

We plan on tracking the results of Herbie’s Hedge Fund over time. We’re curious to see how it does against our BRED Portfolio, and we’re also interested in how it does against the overall stock market.

May 01 2017

Confirmed: #BRED Portfolio on #FIRE

We keep talking about the “BRED Portfolio,” a basket of four cryptocurrencies – Bitcoin, Ripple, Ethereum, and Dash – and there’s a reason why: it’s on fire.

BRED: The Background

Last month on this site, we thought we’d do a little “backtesting,” with our theory that four of the most prevalent cryptos might just be four coins that could line your pocketbook rather nicely. So we did just that, and you can see the original post here: Quadruple your money with the BRED Portfolio.

Similar to what the tech people talk about with “FANG” – Facebook, Amazon, Netflix, and Google – you’re buying a basket that’s supposed to sorta kinda (technical term) replicate the market; as FANG goes, you’ll have a rather good sense of how other tech stocks are going. And with BRED, you’ll have a good sense of how digital currencies (or crypto or altcoins or whatever you want to call these things) are doing.

Did We Mention BRED = FIRE?

Here’s what the portfolio has looked like over the past four months:

(Prices are from Poloniex and reflect market prices at 00:00 GMT. Note that, in the case of Ripple, the price is rounded in the above chart, but is carried out to eight decimal points.)

$10,000 invested equally in Bitcoin, Ripple, Ethereum, and Dash on January 1, 2017 would be worth $72,585.89 today.

What If…You Started on April 1?

To say April was a great month for the portfolio – and for the crypto industry – is an understatement: The portfolio grew 70.5% from April 1 ($42,567.69) to today.

Or, if you just had $10,000 to invest on April Fool’s Day, AND you went back and divided your $10,000 equally and used April 1 prices to buy coins, you would not have been a fool – you would now have $17,243.04.

Caveat: What Goes Up…

Yeah, we have that Blood, Sweat and Tears song in our heads, too.

Listen to the lyrics and proceed with caution.

But still, BRED is on FIRE.

Apr 26 2017

BRED or ICO – Which Path?

We’re tooting our own horn…just a little.

If you have followed this site for the past month (and THANK YOU for doing so), you know that we have been talking about two sides of the “coin” when it comes to cryptocurrency. One the one side, the big behemoths, led by Bitcoin, which soared to north of $1400 US this morning. (NOTE: we realize there are some…issues? questions? with Tether and the USDT price on some sites. We’re going with Poloniex’s numbers from a little before noon Central time today.) On side two: the little guys, be they altcoins or ICOs.

AND YES…there are three sides to every coin, o wise one. Side three is the edge of the coin, where many of you might currently be. Reminder to get started with Coinbase, buy some Bitcoin or Ethereum, and get rolling! They’ll give you a bonus and we’ll get a bonus for referring you.

Back to the tooting of our horn: we believe we’re onto something with the BRED portfolio.

BRED is on a TEAR

When we first came up with the concept, we picked four of the coins with the highest market cap, but also four that could fall into different buckets. The same way that Facebook, Amazon, Netflix, and Google make up FANG – with each bringing a different dish to the table – Bitcoin, Ripple, Ethereum, and Dash all have something a little different about them:

Bitcoin – “first-mover advantage”
Ripple – “banks are using it”
Ethereum – “smart contract” (banks also using it)
Dash – “most consumer-friendly”

Simple enough, can fit this on a napkin. So we thought, let’s create a portfolio of just these four, give them 1/4 each of our investment, and leave it alone.

Here’s what it would look like right now:

Yes, you read that correctly. A $10,000 investment, spread equally between these four coins, made on January 1, would be worth more than $51,995.12 today.

Oh, and if you sat on the edge of the coin and waited until April 1 to buy, you’d still be up 22% THIS MONTH.

But what if you’re waiting for an ICO?

Some ICOs Had INSANE Weeks

While some of this could be the start of a bubble – and our pal Roger Aitken talks about that in this post on GNO – ICOs are on a tear, too. Well, some of them…

GNO set records, rising to a valuation of $300m
TaaS has raised $6.1m US, all of it outside of the US
MobileGo has raised more than $6m in its first week
Exscudo* stumbled a little on day one, but is nearing the $1m mark in only its second day.

* We are participating in Exscudo’s “bounty program” and have purchased a small stake. Also, we wrote about it in more detail over here.

What’s the Takeaway?

If you think things are just getting going, you may very well be right. Bitcoin’s market cap is above $20b, but, with fixed supply and companies still scrambling to get involved in blockchain technology, the four members of the BRED portfolio seem to be hitting the gas pedal.

And these four ICOs, each with their own different angle and spin, could also be poised to make serious news of their own – I mean, in addition to the news they’ve made already.

BRED or ICO?

What about both?

Apr 14 2017

Is it too late to invest in Bitcoin?

Time to get back to the basics, friends. Seriously, we think we might have jumped the gun on this site: while we’re out here talking about “Initial Coin Offerings” and “Coin of the Week” and PIVX and XRP and the BRED Portfolio, we’re likely getting quite a few blank stares from y’all.

bitcoin and coffee — “While you’ve been sipping your espresso, I’ve made $10,000.”

Fine. We get it. There’s an audience of cryptocurrency devotees out there, and there’s also an audience of “what’s this about bitwhatnot?”

Have you missed the Bitcoin boat?

Short answer: NO.

Longer answer: probably best described with that old proverb about tree planting.

The best time to plant a tree is 20 years ago. The second-best time to plant a tree is right now.

So let’s plant that tree, folks. Here, then, are the basics, along with our case as to why Bitcoin is just getting started, and why you should be prepared to dive in like immediately.

Getting Started

To buy Bitcoin, you’ll need a wallet. Start with someone reputable that has been in this space for awhile. We recommend Coinbase, and, in the interest of disclosure, if you sign up and make a qualifying purchase of Bitcoin, you can get a bonus and we’ll get a bonus.

Coinbase works pretty simply: you can transfer money from a fiat currency like the US Dollar into Coinbase, and (as of this writing) choose from two cryptocurrencies: Bitcoin or Ethereum.

You’ll end up with an account that has something called a “wallet” – which is exactly what it sounds like – and the wallet will have an address attached to it. One that looks like this:

1G8Ayc15sqoyGzN4DFUeheRkgFeS9t6oSW

That is the public wallet address, and, as explained rather eloquently in this Reddit thread, you can think of it as the INBOUND address. (YES…IF YOU WANT TO SEND ME BITCOIN, YOU CAN USE THAT ADDRESS.)

The machinations behind the private key are kept by folks like Coinbase, so your Bitcoin is safe.

Other folks might like to use QR codes and put their Coinbase wallet on their mobile phone. This is totally cool, too.

You can get started with a tiny, tiny amount, too. Our first Bitcoin purchase was a whopping $25 worth of BTC, and we were charged all of 37 cents in transaction fees with Coinbase.

If you follow those steps, you now own Bitcoin. Good for you! Now, what do you DO with it? We have two ideas…

Idea 1: Buy and Hold

Some who are really deep into this space will call this “HODL:” “Hold On for Dear Life.” If you were to look at the 2016 chart we produced from Coindesk, you can see what would have happened had you bought Bitcoin on 1/1/2016 and kept it for the entire year (our chart oddly cuts off price on 12/30, not 12/31):

Wonderful, right? All you need is a time machine – which you’d set to bet on the Cubs while you’re at it – and here comes the money rolling in!

Well, not so fast…probably need to understand the economic fundamentals of Bitcoin in order to make your decision. Because, in the case of the Coindesk chart, it’s compared to the US Dollar. And, at a very basic level, if Bitcoin goes up, it’s going up against the value of something that is going down. In this case, USD.

The total value of all Bitcoin being used and transacted in the global economy right now is a bit more than $19 Billion US. But here’s the thing…actually, here are three things:

This is nothing by comparison. For instance, the total of all assets in the US is around $130 Trillion. So the amount of Bitcoin relative to US assets is about 0.015%. Or it’s like finding a $20 bill in an abandoned $130,000 house.
Five years ago, roughly 6,600 transactions were made with bitcoin per day. Today, according (again) to Coindesk, that number is around 250,000.
The number of Bitcoins that will be mined EVER is capped at 21,000,000.

Without getting into the particulars of mining, hashrate, and all that fun stuff, think of it this way: If 21,000,000 pieces of gold were all that were ever going to exist, do you think the value of those pieces would go up – perhaps exponentially – as more people used the gold…and realized how easy it was to use the gold…and found out that there was a finite number of gold pieces in existence?

This is why, when analysts throw out numbers like $500,000 per Bitcoin, those in the know don’t bat an eye. It won’t happen tomorrow. It may not even happen for several years. But…the chances of it happening are pretty darn good.

And this is why some folks just think they’ll HODL their Bitcoins. And who can blame them?

Idea 2: Trade your Bitcoin

This is where you get into the world of speculation. Bitcoin ushered in a host of other coins, tokens, digital currencies. Some of these are also going to change the world in their own little ways. And some of them aren’t worth the paper they’re printed on.

(That was a joke. They’re not printed on paper.)

But there are other coins you can trade your Bitcoin for. To do that, you’ll want to set up an account on one of the exchanges – we use Poloniex – and then you can have at it. Putting it very simply, you’ll take your Bitcoin and trade it for another cryptocurrency that is valued in Bitcoin – platforms like Poloniex have hundreds of trades; a small portion of them are in US dollars – “Tether,” or “USDT” –

And you should also be prepared for violent mood swings, for volatility, and to possibly lose your shirt.

Let’s be honest here: this is closer to gambling unless you know what you’re doing, you’ve studied the charts, and you’ve done some heavy analysis on the underlying fundamentals of the coins.

And even then, it’s likely close to gambling.

If you’re going to trade Bitcoin, we recommend – and again, we’re not investment advisers, past performance does not dictate future results, bet with your head (not over it) and don’t blame us if something goes wrong – the BRED portfolio.

Not too late to start

As of this writing, the Bitcoin price is hovering right around $1200 USDT. So, had you gotten started on January 1 (or so), your stake would be up right around 25%. Which isn’t too shabby, right?

But that growth doesn’t mean the gains are behind us. Prognosticators see nothing but blue skies ahead long-term for the currency. And even if the 21,000,000 Bitcoin only take up 1% of household assets in the USA in ten years, that amounts to market capitalization growth of 65 TIMES where we are now. Meaning a Bitcoin price of $78,000.

Start now.