For some reason I always find myself feeling a little rushed when I write these. I have no idea why, I think it starts to feel like I'm droning on and on and no one wants to read something super long, but when I go back and read it a couple days later they really don't seem that long at all. If anything, probably too short. I thought of a few things I wanted to add to my last post but more importantly I wanted to do a long overdue crypto and stonks look around, plus some more random stuff.
To finish up a few things I was talking about last time, I don't think I really got across how much poker and more so sports betting really changed and sharpened who I am as I person. People tend to think of poker players and gamblers as shady, shifty, con-men liars who you could never trust. And if your only sample is 20-something year old "pro" live poker players, you might be right. (Honestly, SOME live poker pros do tend to be pretty scummy). But real, actual professional gamblers are some of the most trustworthy and dependable people I've ever come across. You have to not only talk the talk, which is easy, but you have to walk the walk too. It's really easy to call yourself a principled person and say you'd never do anything shady or steal from someone if you never have the chance to. It's like that famous quote, "men are as faithful as their options." Fat slobs in their 50's will say that they're loyal to their wives and would never cheat on them but that's easy when no women on the planet are looking for you. It's easy to THINK you're principled but how often are you tested? What does it even mean to be principled? These are the kinds of things that I don't think I really would have thought that much about if I didn't get seriously into advantage gambling. I certainly wouldn't have as early as I did, which was in my low 20's. The idea that you will simply do what you said you'll do, 100%, no matter what, is powerful. I think the default setting for most people is simply looking to avoid conflict at all times, and I think that's a big reason why our country is in the middle of falling apart. Somewhere around 2000 I feel like it almost became cool to be aloof and a little bit flaky? "Like yea bro, whatever, I know I said I'd do that, but now I like don't really feel like it. Take a chill pill bro." Hard, uncompromising principles aren't in fashion anymore and that probably contrbuted to the absolute silliness of the past 5 years or so. And by the way, having and standing by your principles only matters when you're tested. It only matters when it matters and you are only your actions. That's a really good lesson I got from the sports betting landscape that I try to live by with everything I do. If you're trustworthy ONLY when it's easy, then you aren't trustworthy.
Another thing that I've talked about before that I absolutely love about sports betting and poker too to lesser extent is that you really do either win or die. You either win on your own merit or you lose. There is no bullshit. There are no government handouts, no marketing teams, no one cares who your dad is or what college you went to. There's no sucking up, there's no "my uncle went to college with the boss." Your skin color, your sex, your age, your views, even your personality, none of it matters even a little bit. There's no nonsense, really. You either can do it or you can't, and if you can't then you don't. Hell, there isn't really even luck involved. You can maybe get lucky and run good for a little while, but not long term (in sports betting anyway.) That sort of harsh clarity is refreshing, especially in todays world where "merit" is becoming a four letter word.
The only caveat to that is with people selling picks. I'll say this again because it's important and people just absolutely do not want to hear it: DO NOT PAY FOR PICKS. EVER. No one who wins sells picks and no one who sells picks wins. It's that simple. If you're paying for picks in 2023, you really do deserve to lose money, and I'll bet anyone on here that there is not a single legit winning tout out there (with one exception. I've mentioned them before but I will again here for completeness sake. There is one tout that is legit and does win long term. They're called Right Angle Sports or RAS. But their packages cost thousands of dollars and are really meant for professionals only. The second they release a play, the market moves, usually pretty hard. They have a super complicated process for releasing plays because the biggest knock on them is simply that it's almost impossible to get their released number. The reason for that is that the market respects them and reacts accordingly to their releases. When they give out a play, the market reacts instantly. And I do mean instantly. They also specialize in more niche markets like the WNBA and smaller college football and basketball leagues. They track not only their units won or lost but also how they do against the closing line, which is the single best predictor of future success. So in short, if you HAVE to pay for picks, look into RAS. Other than that, just don't. Seeing people pay for picks really does make me sad. It's so easy to bamboozle people and everyone is always looking for a shortcut.)
I'll have more about sports betting and poker in the future, maybe I'll start posting some poker hands. But let us shift focus here for a little bit to crypto. It's been a while since I updated my positions so lets start there.
As I mentioned here before, I did get caught up in the BlockFi situation and lost a big chunk of my holdings. I think I'm going to end up getting at least a portion of it back, but I'm not counting on it. For my records, I counted what I lost in all of that as simply a giant sell for which I received nothing in return. In sports betting, my "edge" was mostly from finding and staying at really soft accounts. The drawback from such a strategy is that usually the softer the site, the bigger the chance of getting stiffed when you win. So when that does happen, you have to count it in your figures. I always only counted money in my hand as money won. If I won 10k but collected only 5k, then that obviously goes in as a 5k win. I use the same logic here. It was my own fault for trusting BlockFi so I have to count the theft as a big fat sell for zero dollars.
Now, having said all that, I am going to detail what my position would have been if the BlockFi stuff didn't happen just one time, now, simply to show my possible skill as a trader and what things should have looked like. After this, the BlockFi stuff will be factored in.
So, if I hadn't been fucked by BlockFi, my average owned BTC would be $18k, with an ROI of 44% (at BTC's current price of about 27k). My average buy price is 30k, and average sell price is 34k with mid five figures volume in buys and sells. I think that is really, really good, especially considering that I started buying BTC when it was at about 35k. Now with about 2.5 years in this space, I think I can safely say that I am a good crypto trader and I have the stats to back it up. My general strategy has always been to be slowly building up a position and sell a little bit on green days and buy a little bit on red days. I never use leverage or anything like that. Just slowly and solidly building up exposure and unwinding a little bit when it goes straight up.
With ETH, my average owned price would be $773(!) with an ROI of 30%. LINK would be average price of $7.7 with a 20%ish ROI.
So that's the good news. The bad news is that the BlockFi stuff did, obviously, happen, and my actual current holdings are this:
BTC: Avg buy price: $30.4k, avg sell price: $28.7k. Overall average buy price: $63k. Stinks!
ETH: Overall average buy price: $7k. Not good!
LINK: Overall buy price: $10.9. Bad, but not horrible.
LTC: Unaffected by BlockFi, average price of $56 only owning a few hundred worth. I love trading Litecoin. LTC is one alt-coin that I do actually like. It does basically the same thing as bitcoin but even faster. It uses proof of work (the super secure method) and its reputation is sort of like a rock solid, boring, safe alternative to BTC. It moves around a good amount but with a decent sized market cap (it's #11 crypto in the world by market cap) it doesn't move TOO crazily. So I like to sell tops and buy back in lower. Right now I like 95 and 100 as a local top and buy back in at 89 or below.
Polygon/Matic: Also unaffected, average price of $.87 but owning a little bit more. I'm not super interested in Matic and its use case but I know that it does get used a lot and the news around it always seems pretty positive. It moves around a lot too and I'm scooping some back up after taking profits at $1.3.
So obviously the BlockFi situation was a pretty big disaster but I am a little bit proud of myself for staying the course. Eventually the whole mess will get absorbed and my buys will be lower than my sells. That will be a happy day.
My overall outlook right now is that it feels like we're in the middle of a bear market. A good tried and true fact of the crypto space is that prices always bottom on apathy, not on bad news. When you look back on prior bear markets, prices bottomed out when simply no one was talking about Bitcoin or crypto. A good metric for that is new subscribers to popular youtube crypto channels. There's a guy I follow who charts this stuff and the general interest in crypto is definitely down and waning further, but it does look like it still has a ways to go. There's a big annual crypto "conference" in Miami happening this week and from what I've gathered, attendance is around 15k people. Last year it was 35k. So that's a pretty good snapshot of where we are, interest-wise right now. I think this whole year is going to be choppy/flat and then we might get a bull run with new highs in mid 2024 which is also about when the halving is expected to happen. So my general strategy is to slowly keep buying and building up positions and probably fading any runs. If we dip under 17k again, that'll be the time to back the truck up.
I read a decent book recently called "The Lords of Easy Money." It's by a finance journalist who covered the Fed for two decades. It was a good look at not only the Fed and its policies, but at the people who make up the Fed. It was similar to "The Creature From Jekyll Island" except way less conspiracy theory-y (and a lot shorter). I took away a few tidbits that I thought were interesting. For one, the whole money printing/QE disaster came from Ben Bernanke who was the chairman from 2006 to 2014. He was a super academic, bookworm nerd type guy and he operated exactly how you'd expect one of those guys to. He was famous for super complicated, mumbling speeches where people were always confused trying to decipher what he was saying. He loved equations and acronyms as these sort of guys usually do. He directed the Fed to print trillions of dollars during the 2008 crisis and a big chunk of the book was about how people inside the Fed warned against it for one major reason: it would be hard to stop. And the detractors were right. Once they started printing money, the market started to expect it. And once that happens, it becomes hard to stop doing it and not crash the economy.
We all know what happened in 08 and in the subsequent years, but it was interesting to learn that Janet Yellen was Bernanke's like little protege. Their offices were right next to each other and they had lunch and hung out often. I think anyone who has worked in an office knows that stuff like that is important. So it wasn't any big surprise that Yellen managed the Fed similar to how Bernanke did. But the most interesting thing I learned was that Jay Powell was very much NOT in the little academic clique. He came from a private equity job and bounced around a little bit from the public sector to private sector before joining the Fed.
I say all this because I think it's at least a little indicator of where the Fed terminal rate ends up. Ever since the government really turned on the money printers in 08, a huge factor in the stock market (or any market now, really) is what the Fed does with its rate. This effects the interest rate of every other bank and institution across the country and has big ramifications on big, publicly traded companies. And the history of the Fed is generally that they start hiking rates and announce that they're going to keep raising rates until some benchmark is reached (right now it's getting inflation under control and, believe it or not, INCREASING unemployment). But what usually happens is that while they're increasing rates, something breaks or some big business goes under or almost goes under and threatens to take everyone down with them. And then the Fed has to either stop raising rates and keep them steady, or decrease them. That has happened so many times that the market actually expects it. So the futures on where the rate ends up always prices in a rate cut before the date that the Fed says it'll cut. However, I think this time may be different. I think Powell MAY be a little bit different than the norm and he may stick to his plan more than the market thinks. He's been pretty consistent so far, even with the whole SVB bank fiasco.
With that in mind, I think stocks along with crypto will come down this year. I think these last few months are a little bit of a dead cat bounce. It just didn't quite feel like enough of a dip, did it? The unwinding of all this silliness and can-kicking has to come for us at some point. I think best case scenario is some sort of a soft landing but really, who knows. If Powell does stay on track and keep raising rates, which he should, maybe we get inflation at least a little bit under control (at least with the public numbers. I don't trust CPI reports anymore. Did you know that they constatnly change how the CPI is calculated? Which makes it pretty hard to use it to compare inflation data of the past). If that happens, when the Fed finally does reverse course and starts to bring rates back down again, that might be the catalyst for the next bull run. It may all line up for mid 2024 with the BTC halving (and maybe a new President, friendlier to the economy). I think a year from now could be the start of a new run. If we do get a big crash in the meantime and we see new lows in crypto and in equities, that is when you need to pounce. You make money in bull markets but you get rich in bear markets. That's my outlook right now, anyway.
That's about it for now, check back soon as I will be writing more in the near future. See ya!
