[ANN] Asset Allocation during Financial Crash. +20.9% Annualized Gains

[N12]

I don't think it is entirely fair to compare B&H to someone's trading results purely on past profits of a few years.

1) Unconditional B&H is subject to complete risk of loss. On the other hand, trading is subject to counterparty risk. This risk can be managed in some ways at least (pick a longer term trading style and withdraw your money in between trades, try spread your assets on multiple exchanges). Presumably, this risk will decrease once Bitcoin gets away from shady exchanges and becomes tradeable via ETF on actual brokers.
2) The performance of Bitcoin the past few years may not be the expected outcome, and the strategy that worked very well in the past may not work as well in the future

Not to say buy and hold doesn't have merit. It is a great "set it and forget it" strategy. But say you allocate 5% to BTC and then it becomes 90% because it appreciated so much, then you'll probably want to do risk management either via re-allocation or by trading.

PS: I did not think you lost anything to MtGox, I'm surprised to hear that. Had thought you switched it all to Bitstamp before.

[S3052]

I don't think it is entirely fair to compare B&H to someone's trading results purely on past profits of a few years.

1) Unconditional B&H is subject to complete risk of loss. On the other hand, trading is subject to counterparty risk. This risk can be managed in some ways at least (pick a longer term trading style and withdraw your money in between trades, try spread your assets on multiple exchanges). Presumably, this risk will decrease once Bitcoin gets away from shady exchanges and becomes tradeable via ETF on actual brokers.
2) The performance of Bitcoin the past few years may not be the expected outcome, and the strategy that worked very well in the past may not work as well in the future

Not to say buy and hold doesn't have merit. It is a great "set it and forget it" strategy. But say you allocate 5% to BTC and then it becomes 90% because it appreciated so much, then you'll probably want to do risk management either via re-allocation or by trading.

PS: I did not think you lost anything to MtGox, I'm surprised to hear that. Had thought you switched it all to Bitstamp before.

Blitz,
well said!
On MtGox, I lost some, but it was minor - because indeed I switched most to Stamp before. Where I lots a lot was bitcoinica.

[S3052]

2.
Assets September 18, 2014.

89% Cash (USD)
6% Gold
4% Short Stocks (S&P 500)
0.5% Bitcoin
0.3% Monero
0.2% DIEM (as a "playground play", no serious fundamentals behind)

[akhentek]

Appreciate you sharing and updating this asset allocation table with everyone here.

Curious to hear your assessment of DRK in relation to XMR.  DRK seems to be doing well compared to other cryptos over the past few days.



 

[jimbobway]

1) Stocks will crash by 2016 and will mark new 15-20 year lows.
2) Precious metals will survive better but will also decline first before rallying strongly. It is key to own physical precious metal, not paper certificates.
3) The US Dollar will initially fare better against other currencies (particularly against the EUR), but then crash as well and may disappear in its current form by 2017-2018.
4) Overall asset prices and prices of goods will decline = we are in a unprecedented deflation.

Are you saying stocks will crash by January 1st 2016?  So within one year and 3.5 months?

So if USD will fare better than other currencies and you hold 90% USD, when USD crashes and disappears where will you move your money in 2017-2018?

[S3052]

1) Stocks will crash by 2016 and will mark new 15-20 year lows.
2) Precious metals will survive better but will also decline first before rallying strongly. It is key to own physical precious metal, not paper certificates.
3) The US Dollar will initially fare better against other currencies (particularly against the EUR), but then crash as well and may disappear in its current form by 2017-2018.
4) Overall asset prices and prices of goods will decline = we are in a unprecedented deflation.

Are you saying stocks will crash by January 1st 2016?  So within one year and 3.5 months?

So if USD will fare better than other currencies and you hold 90% USD, when USD crashes and disappears where will you move your money in 2017-2018?

Great questions!
First, timing is the most difficult to forecast. Price is easier. Along those lines, the S&P 500 will crash at least to a lower low than in 2009 in USD terms. Quite probably it will fall even lower into the 100 point range. In terms of timing, I'd give a range between 2016 and 2017.
We will keep trying to narrow down the timing in the forecasting work we do.

Second, when moving out of USD? I will probably move a high percentage into physical hold and silver stored in a safe location like at safe store from safewealth.com. And only keep the needed cash in local currencies to survive and buy food.

[S3052]

Update 3.
Assets September 19, 2014.

85% Cash (USD)
6% Gold
5% Short Stocks (S&P 500)
3.5% Bitcoin
0.3% Monero
0.2% DIEM (as a "playground play", no serious fundamentals behind)

[macsga]

Update 3.
Assets September 19, 2014.

85% Cash (USD)
6% Gold
5% Short Stocks (S&P 500)
3.5% Bitcoin
0.3% Monero
0.2% DIEM (as a "playground play", no serious fundamentals behind)

Hi. This is an interesting thread to watch. Great job S30S2! I'm a bit wary on your 2016-17 predictions but I will grand you the dubiousness about the timing. The outcome is definitely certain and I have the same opinion as well. What I find intriguing though is that you moved your Monero holdings to BTC. Why did you do so?

Cheers

[S3052]

Update 3.
Assets September 19, 2014.

85% Cash (USD)
6% Gold
5% Short Stocks (S&P 500)
3.5% Bitcoin
0.3% Monero
0.2% DIEM (as a "playground play", no serious fundamentals behind)

Hi. This is an interesting thread to watch. Great job S30S2! I'm a bit wary on your 2016-17 predictions but I will grand you the dubiousness about the timing. The outcome is definitely certain and I have the same opinion as well. What I find intriguing though is that you moved your Monero holdings to BTC. Why did you do so?

Cheers

Thanks much!
In fact I moved cash to BTC today around 390 for a brief trade with stop at 379.
And moved another cash portion to short S&P 500 (2012) and Nasdaq 100 (4107)

[macsga]

Update 3.
Assets September 19, 2014.

85% Cash (USD)
6% Gold
5% Short Stocks (S&P 500)
3.5% Bitcoin
0.3% Monero
0.2% DIEM (as a "playground play", no serious fundamentals behind)

Hi. This is an interesting thread to watch. Great job S30S2! I'm a bit wary on your 2016-17 predictions but I will grand you the dubiousness about the timing. The outcome is definitely certain and I have the same opinion as well. What I find intriguing though is that you moved your Monero holdings to BTC. Why did you do so?

Cheers

Thanks much!
In fact I moved cash to BTC today around 390 for a brief trade with stop at 379.
And moved another cash portion to short S&P 500 (2012) and Nasdaq 100 (4107)

You and me together. I've bought 4 btcs today as well (haven't done so for a couple of years tbh). I personally think that the bottom is reached ($370-380 range on Stamp). What do you think?

[S3052]

Update 3.
Assets September 19, 2014.

85% Cash (USD)
6% Gold
5% Short Stocks (S&P 500)
3.5% Bitcoin
0.3% Monero
0.2% DIEM (as a "playground play", no serious fundamentals behind)

Hi. This is an interesting thread to watch. Great job S30S2! I'm a bit wary on your 2016-17 predictions but I will grand you the dubiousness about the timing. The outcome is definitely certain and I have the same opinion as well. What I find intriguing though is that you moved your Monero holdings to BTC. Why did you do so?

Cheers

Thanks much!
In fact I moved cash to BTC today around 390 for a brief trade with stop at 379.
And moved another cash portion to short S&P 500 (2012) and Nasdaq 100 (4107)

You and me together. I've bought 4 btcs today as well (haven't done so for a couple of years tbh). I personally think that the bottom is reached ($370-380 range on Stamp). What do you think?

I think it has been a temporary bottom. I currently see an a-b-c bounce up. If it does not turn into an impulsive 5-wave move, we may see a breach of the lows in the next days. I raised my stop to 385 $.

[S3052]

Update 3.
Assets September 19, 2014.

85% Cash (USD)
6% Gold
5% Short Stocks (S&P 500)
3.5% Bitcoin
0.3% Monero
0.2% DIEM (as a "playground play", no serious fundamentals behind)

Hi. This is an interesting thread to watch. Great job S30S2! I'm a bit wary on your 2016-17 predictions but I will grand you the dubiousness about the timing. The outcome is definitely certain and I have the same opinion as well. What I find intriguing though is that you moved your Monero holdings to BTC. Why did you do so?

Cheers

Thanks much!
In fact I moved cash to BTC today around 390 for a brief trade with stop at 379.
And moved another cash portion to short S&P 500 (2012) and Nasdaq 100 (4107)

You and me together. I've bought 4 btcs today as well (haven't done so for a couple of years tbh). I personally think that the bottom is reached ($370-380 range on Stamp). What do you think?

I think it has been a temporary bottom. I currently see an a-b-c bounce up. If it does not turn into an impulsive 5-wave move, we may see a breach of the lows in the next days. I raised my stop to 385 $.

Exited the BTC long position at 418.35

[600watt]

nice thread, ty

 

[thresher]

I wanted to read this and actually gain some insight, but quite frankly you don't have any real estate, so in other words you have no money.  Do you have more money than me, possibly, but if your investments don't include even your own home in them, than either A. you don't have a lot of money or B. you don't know what your talking about.

Also no retirement plans, life insurance, mutual funds, etc?  You just have 85 percent of all the cash you own sitting under your mattress?  Even having it in a bank should be listed if your trying to show your asset allocation. 

Not trying to lay into you, but yeah....

[S3052]

Good question

The asset allocation discussed here is meant to be for liquid assets in the general sense. I recentely ended all life insurances and got them liquidated to cash . I also sold all remaining stocks over the past weeks.
I keep a risk life insurance and the mandatory retirement plan from my work.


I don't have real estate as prices are in a bubble and I'd buy real estate in a couple of years if I really want to.

Also, real estate is different depending on your location .
Hence, this is why my example allocation is build on liquid assets and one that could work globally.

And I have nothing under the mattress. Cash is sitting in the (so far) safest banks.

[thresher]

Good question

The asset allocation discussed here is meant to be for liquid assets in the general sense. I recentely ended all life insurances and got them liquidated to cash . I also sold all remaining stocks over the past weeks.
I keep a risk life insurance and the mandatory retirement plan from my work.


I don't have real estate as prices are in a bubble and I'd buy real estate in a couple of years if I really want to.

Also, real estate is different depending on your location .
Hence, this is why my example allocation is build on liquid assets and one that could work globally.

And I have nothing under the mattress. Cash is sitting in the (so far) safest banks.

Thanks for the clarification.

[S3052]

Update 4.
Assets September 21, 2014.

88% Cash (USD)
6% Gold
5% Short Stocks (S&P 500)
0.5% Bitcoin
0.3% Monero
0.2% DIEM (as a "playground play", no serious fundamentals behind)

Main change over the past 24h was to cash in +9.6% profit of a leveraged bitcoin short position.

Total portfolio up +0.8% since inception on September 14

• If someone would have invested 1,000 USD, this person would be up 8 USD.
• If someone would have invested 1,000,000 USD, this person would be up 8,000 USD.

[S3052]

Update 5.
Assets September 21, 2014.

85.3% Cash (USD)
6% Gold
5% Short Stocks (S&P 500)
3.2% Bitcoin
0.3% Monero
0.2% DIEM (as a "playground play", no serious fundamentals behind)

Added leveraged bitcoin long position at 406 $.

[vphen]

Update 5.
Assets September 21, 2014.

85.3% Cash (USD)
6% Gold
5% Short Stocks (S&P 500)
3.2% Bitcoin
0.3% Monero
0.2% DIEM (as a "playground play", no serious fundamentals behind)

Added leveraged bitcoin long position at 406 $.

could you let us know your target of taking profit and stoploss

[ArticMine]

I would consider this a fairly conservative defensive portfolio in anticipation of of a Financial Crash. The USD providing the bulk of the defensive position while the short (S&P 500) and Crypto-currencies XBT, XMR and DIEM providing the growth part to offset the 1-2% decline in the purchasing power of USD. 

There is one part that leaves me baffled.

The US Dollar will initially fare better against other currencies (particularly against the EUR), but then crash as well and may disappear in its current form by 2017-2018.

Given that this is over 85% of the portfolio what happens if this happens sooner? Presumably the XBT, XMR and DIEM will skyrocket to compensate for the loss in value of the USD. The short (S&P 500) position will become worthless or have negative values since it is in terms of USD. I know there are very few alternatives but, still it is very hard to have a 85% USD position if one believes the USD is in such deep trouble.