Ripple

Jun 01 2017

Turn 10K into 193K in Just Five Months

It sounds too good to be true, right? Make a small-ish investment, of only $10,000, then let it sit and ferment. After five months, sell it all and find yourself with a 19x return: something that others might wait decades for, accomplished in less than half a year.

Welcome to the crazy world of cryptocurrency, and the even crazier concept we created called the BRED Portfolio.

If it sounds too good to be true, are we in a bubble?

Great question, and not one we’re going to answer with this post. Instead, let’s just go to the videotape and talk about exactly how this came about.

First up, in early April – so no, WE didn’t invest in our basket of cryptocurrencies on January 1 – we thought that this world needed something similar to FANG: Facebook, Amazon, Netflix, and Google. These four companies are all synonymous with some sort of internet, web, social, digital, or online business. But they also are a bit – or a LOT – different from each other.

Bringing us to the BRED Portfolio. We needed a catchy acronym, but we also needed four currencies that each had a little bit of a different angle in this emerging space. Enter BRED:

Bitcoin, the ne plus ultra of cryptocurrencies
Ripple (ticker XRP), which is taking on SWIFT and starting to win
Ethereum, and its smart contracts and backbone of a whole host of other launches (like Golem, for instance)
Dash, probably the most “consumer-y” of the cryptocurrencies.

Our idea: what if you had gone back in time to January 1, bought $2500 of each of the four currencies, and left it alone. What would that portfolio look like today?

If it sounds too good to be true, you need a time machine

Here are the results:

Oh. My. Goodness.

What if you waited until April 1?

We re-weighted the portfolio accordingly, buying $2,500 each of our BRED coins. The result is also quite staggering.

So now what?

You probably have a couple questions, and we’ll try to answer them.

First of all: I can’t say whether or not we’re “in a bubble.” No one knows. For each prognosticator that says there’s too much of all of these cryptocurrencies out there, there’s someone else who says that we’ve just scratched the surface.

The answer – as is normally the case in probably just about everything – is somewhere in the middle. Like the dot-com bubble of the late 90s and early 2000s, if it pops, there will be quite a few losers. There will also be a few winners: companies like Google or Amazon that kept it going and emerged and are now beyond dominant.

As for coins, whether there are too many and whether there’s too much supply of all of them: that is another good question. Ripple is a great example – to the casual observer, supply in the billions vs. an all-time capped supply number of 21 million for Bitcoin might sound like it’s a recipe for disaster for Ripple.

But, as has been discussed quite a few places, maybe Ripple is managing its entire currency plan extremely well.

There will be volatility. There will be craziness. There will be a roller coaster ride. That’s expected.

And, if you haven’t gotten started yet???

What are you waiting for? Seriously, you need to think about getting started with at least Bitcoin and/or Ethereum. You can do that by clicking on this AFFILIATE LINK for Coinbase and getting started. You can start small. But we recommend you get started.

May 25 2017

BRED Update (Or, How’s Your Bitcoin?)

Cryptocurrency traders are a special lot. They are, after all, a new breed, and the markets they trade in don’t totally act like the stock markets, nor do they totally act like the forex markets.

And the “buy and hold” folks seem to be in the minority, at least if you trust the chat rooms on places like Poloniex.

To wit, the activity the past 24 hours or so shows some serious red numbers. Dropping like flies, those “altcoins.” The sky, she’s a fallin’.

Now what? You moved your hard-earned Bitcoins into something like Ripple’s XRP token and you’ve seen it “plummet” 26 percent in the past 24 hours.

You could be like the guy on this all-too-real Reddit post from yesterday.

I have been a BTC hodler for about 3 years now. Things were good and I believe in bitcoin a lot. When the price was dropping and dropping I kept on buying and buying, for the simple reason that I believe in Bitcoin.

Enter a few days ago: Ripple was on the rise. I thought I could increase my BTC-stack a bit by following the ripple trend. I was stupid and went all in… I should never have gone all in on anything. I’m not all in on bitcoin, so why would I put all my hard earned btc in something I do know little to nothing about, right? Well… enter the greed I thought I had left behind me a long time ago.”

Let’s just say it didn’t end well. A cautionary tale for the day traders and trend riders. And those who don’t hedge. And those who don’t buy and hold. And…

Enough Already: Get to the Headline

Oh yeah, that. The headline today asks “How’s Your Bitcoin?” because that has been the dominant news this week. Yes, even above some of those other coins that seemed to come out of nowhere and jump up by 2x or 3x – I’m looking at you, ZCash – Bitcoin’s rise to above $2,500 each is rather thrilling. Cool, yes, unsettling, maybe.

The BRED Portfolio, which we started tracking on April 1 (it’s ONLY been two months? Really?), takes four of the currencies – Bitcoin, Ripple, Ethereum, Dash – and puts them in equal parts into a basket, with an initial investment of $10,000. (We went back to January 1 so we could look at this from a YTD standpoint, and we’ll give further updates on the 1st of each month.) Its growth has been staggering – but the growth has actually been mostly due to non-BTC assets.

Meaning that Bitcoin is back in the spotlight at the expense of some gains in the portfolio.

So, even with the attention on Bitcoin, the BRED Portfolio is still dominated by the growth of XRP, which is still more than half of the overall $195,821.24.

Is there a lesson here?

Maybe: diversification is good. Riding the waves isn’t. Buying and holding, probably also good – unless this entire portfolio and the crypto universe turns out to be a house of cards, in which case we’re all spinning our wheels.

A broader point, though, is one that we should make: Bitcoin is still “dominant” (this gets tracked – Bitcoin as a percentage of the overall cryptocurrency marketplace, which, according to Coinmarketcap.com, has fallen to 49.3%) AND is still the gateway currency. If you’re getting started, or if you’re trading for the first time, the odds are that you’re trading Bitcoins for whatever you end up with.

Bitcoin is the gold standard, or the world’s reserve cryptocurrency.

Whether it will remain that way for a while? That we’ll wait on.

May 17 2017

The Ripple Effect

OMG, Ripple! OMG, XRP!

Ripple, the company, and XRP, the coin, are both on a serious tear. How serious? Let’s give you a few points about this, ahem, Ripple Effect. (I’m here all week.)

1. It’s made us question various portfolios.

Yeah, yeah, we talk about the #BRED Portfolio quite a bit here. In fact, we were gonna write about this very subject on Sunday morning, before we got sidetracked. Here’s the Excel chart we were going to share.

And here’s that same chart, but updated with today’s numbers (pulled around 8 p.m. CDT, May 17, from Poloniex, USDT trades).

$10,000 in our basket of Bitcoin, Ripple (XRP), Ethereum, and Dash would yield more than $206,323.19 today. IN FACT, a $2,500 investment in RIPPLE on January 1 would be worth $154,270.04 today.

How much portfolio weighting and shifting should one do after an exercise such as this? Remember, we entered this HYPOTHETICAL portfolio on January 1 with four coins that were each equally weighted.

So we did the math: re-weighting the portfolio on April 1 would have given you 115,000+ coins/tokens of XRP. That, using the above math – VOLATILITY, BABY; the numbers keep shifting as we type – would give you more than $46,000. In XRP alone. (Whole portfolio? Went from $10K to $57,000.)

2. It’s made us wonder…why it’s so special?

I had to – literally – “STOP THE PRESSES” when I saw this article from Logan Kugler on the Huffington Post website. It’s awesome; there’s no sense in my trying to explain what he explains so well. Here’s a link:

Ripple and XRP Are More Stable Than You Think.

To wit: they’re going to take out SWIFT. Next year? No. Ten years from now? Maybe.

AND the article does a great job of walking us through the differences between Ripple (company) and XRP (the coin).

3. It’s made us look for…the next Ripple.

The thought of having any asset that goes from half a cent to 40 cents makes any trader drool.

We had been working on a post we were calling “The Next XRP?” and then we had to stop writing the post because, well, the next XRP is actually XRP.

That’s not a fair answer to the question, though. Is there another company with technology like Ripple AND a coin like XRP? We don’t think so. (Re-read Logan’s article for the down low.)

However, is there another coin that could go from less than a penny to 40 cents, or beyond? Sure. (Don’t worry, we’re working on that blog post.)

For now, y’all…sit back, relax, and enjoy the Ripple (effect).

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.