1/Intro
Every macro indicator is screaming recession. The last decade of excess has come to an end and it’s time to pay the piper.
I cannot promise you’ll make money during these times, what I can do is to make tactical suggestions to maybe benefit from the situation.
Every macro indicator is screaming recession. The last decade of excess has come to an end and it’s time to pay the piper.
I cannot promise you’ll make money during these times, what I can do is to make tactical suggestions to maybe benefit from the situation.
2/ Background
The other week we covered why most people are not going to do well in this environment, and today we’ll discuss how to benefit from a bear market.
The other week we covered why most people are not going to do well in this environment, and today we’ll discuss how to benefit from a bear market.
https://twitter.com/flantoshi/status/1519048946798182407?s=20&t=7n6hYnwdBhwP-YVX6jO2tA
3/ Reserves
If you believe in the fundamentals of your portfolio, it’s very tempting atm to look at the asset ATH and then look at current prices, thinking it’s a sure thing to throw money at it
Don’t fall into this trap, get 6 months of living expenses before anything else
If you believe in the fundamentals of your portfolio, it’s very tempting atm to look at the asset ATH and then look at current prices, thinking it’s a sure thing to throw money at it
Don’t fall into this trap, get 6 months of living expenses before anything else
4/ Plan for the worst
The 6 months of living expenses will create a buffer between you and the worsening macro picture.
If you lose your job, you have time to find a new one, and you also won’t be tempted to sell your portfolio holdings at low prices to make ends meet.
The 6 months of living expenses will create a buffer between you and the worsening macro picture.
If you lose your job, you have time to find a new one, and you also won’t be tempted to sell your portfolio holdings at low prices to make ends meet.
5/ Understand inflation
Inflation might erode a portion of those 6 months of living expenses, write it off as the cost of doing business. I’d much rather pay “anti-homelessness” insurance than to end up on the streets
IMHO, it’s likelier we have stagflation over hyperinflation
Inflation might erode a portion of those 6 months of living expenses, write it off as the cost of doing business. I’d much rather pay “anti-homelessness” insurance than to end up on the streets
IMHO, it’s likelier we have stagflation over hyperinflation
6/ Degen Mode
Ok, so now you have 6 months worth of living expenses ready, what do you do? This depends on your risk tolerance, whether to buy safe(ish) things like indexes, REITs, etc or just continue in degen crypto mode.
Either way, don’t just jump in all at once.
Ok, so now you have 6 months worth of living expenses ready, what do you do? This depends on your risk tolerance, whether to buy safe(ish) things like indexes, REITs, etc or just continue in degen crypto mode.
Either way, don’t just jump in all at once.
7/ Intro to DCA
DCA stands for Dollar-Cost-Averaging, which means investing a fixed amount of dollars every set amount of time, in order to capture the volatility within the market. This is typically used by people on salaries who are investing a portion of their wages.
DCA stands for Dollar-Cost-Averaging, which means investing a fixed amount of dollars every set amount of time, in order to capture the volatility within the market. This is typically used by people on salaries who are investing a portion of their wages.
8/ DCA but with a twist
You can DCA backwards as well, when the price is falling, you can benefit from it. But the best way I’ve found is by using something I call “bear traps”.
The trick is to go to your Centralized Exchange and put set orders at lowball prices…
You can DCA backwards as well, when the price is falling, you can benefit from it. But the best way I’ve found is by using something I call “bear traps”.
The trick is to go to your Centralized Exchange and put set orders at lowball prices…
9/ Backwards DCA
Really lowball, don't be shy and treat it as if that money is gone (if you're anywhere near needing it in the next months, cancel the orders and use the money)
The buy order prices should be ones you'd feel VERY happy to get when you place the orders.
Really lowball, don't be shy and treat it as if that money is gone (if you're anywhere near needing it in the next months, cancel the orders and use the money)
The buy order prices should be ones you'd feel VERY happy to get when you place the orders.
10/ Descending Ladder
Additionally, you can DCA backwards by creating a descending ladder - say one buy order at $0.70, another at $0.65, etc.
Absolute worst-case scenario you didn't manage to buy all of them, but you got many of the best prices and you kept your money.
Additionally, you can DCA backwards by creating a descending ladder - say one buy order at $0.70, another at $0.65, etc.
Absolute worst-case scenario you didn't manage to buy all of them, but you got many of the best prices and you kept your money.
11/ A note on Prices
People have a bias towards certain numbers, you can see this in the order books, anything ending in 0 or 5 are often support areas, as people default to them.
So set your buy orders for weird numbers like ending in 3 or 7 to get ahead of the rest
People have a bias towards certain numbers, you can see this in the order books, anything ending in 0 or 5 are often support areas, as people default to them.
So set your buy orders for weird numbers like ending in 3 or 7 to get ahead of the rest
12/ What goes down, doesn’t always come back up
Don’t assume that because some asset has gone down, its ATH is indicative of any future prospects. It might just never recover.
Don’t throw good money after bad, really think about whether something has a future.
Don’t assume that because some asset has gone down, its ATH is indicative of any future prospects. It might just never recover.
Don’t throw good money after bad, really think about whether something has a future.
13/ Fortunes are made during bear markets
Due to my former role in TradFi, I had a chance to ask wealthy people how they made their $.
Overwhelmingly, the people who actively made it to the rich camp did so by investing when people were afraid
Due to my former role in TradFi, I had a chance to ask wealthy people how they made their $.
Overwhelmingly, the people who actively made it to the rich camp did so by investing when people were afraid
14/ Don’t listen to influencers
(I hate the term “influencers”)
It’s ironic I say this to ya, but don’t listen to crypto accounts and DYOR.
If we’re not getting paid off, we might have a vested interest, know people in a project, etc. Be careful whom you listen to.
(I hate the term “influencers”)
It’s ironic I say this to ya, but don’t listen to crypto accounts and DYOR.
If we’re not getting paid off, we might have a vested interest, know people in a project, etc. Be careful whom you listen to.
15/ Be patient
Someone close to me waited around a decade for their investment thesis to come true. On paper, it made sense, and everything was prepared.
But it took many years for markets to react. He was able to retire once the markets noticed.
Someone close to me waited around a decade for their investment thesis to come true. On paper, it made sense, and everything was prepared.
But it took many years for markets to react. He was able to retire once the markets noticed.
16/ Stop looking at the fucking prices
Seriously!
Uninstall the apps, block the sites, do whatever you need to do to not think about it.
If your convictions remain strong, just use the aforementioned “bear traps” that work automatically, and you don’t need to stress out.
Seriously!
Uninstall the apps, block the sites, do whatever you need to do to not think about it.
If your convictions remain strong, just use the aforementioned “bear traps” that work automatically, and you don’t need to stress out.
17/Conclusion
It’s going to be a bumpy road ahead. Not just in crypto, but all markets. Don’t be greedy, and stick to your plans. Worst thing you can do is to react emotionally
The best way to make the most of the bear market is to go with the grain, rather than try to fight it
It’s going to be a bumpy road ahead. Not just in crypto, but all markets. Don’t be greedy, and stick to your plans. Worst thing you can do is to react emotionally
The best way to make the most of the bear market is to go with the grain, rather than try to fight it
18/Shilling
If you liked this, please consider giving a follow. I write one large thread a week, which looks at crypto from a completely different POV
I then convert these threads to full-blown articles with greater depth and evidence on Medium
medium.com/@flantoshi
If you liked this, please consider giving a follow. I write one large thread a week, which looks at crypto from a completely different POV
I then convert these threads to full-blown articles with greater depth and evidence on Medium
medium.com/@flantoshi
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