A Review Of The Crypto K.I.S.S. Strategy

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2 years ago

It is well known among stockmarket index investors to often say "What would John Bogle do?" when it comes to any type of investment. This is why index investors often get called Bogleheads.

John Bogle is a famous American investor who founded the world's first index fund. He is also the founder and former chief executive of Vanguard according to Wikipedia.

He became famous because his argument was that over the long term, investors cannot beat the average market return. Only a very few could beat the market for any amount of time and for active investors, the record was even worse.

The reasoning goes that those who actively trade their accounts will give up some of their returns for fees and taxes unnecessarily. If you consider that a Boglehead will maybe buy his index fund once per month and have just 12 transactions a year. The dividend investor with at least 40 stocks may have 12x40=280 transactions. Of course, they may not buy so many each month, but it's not uncommon.

You can therefore see the huge difference in transaction costs even by comparing just these two types of investors, that John Bogle may have a point.

The other thing is that with an index fund, you can usually invest passively. A dividend investor with 40 stocks will need to spend at least an hour each month, preferably each week to keep an eye on his investments. 40x12=480, which is 20 days minimum of taking care of and reviewing your investments. An hour each week would be sensible 52x40=2086
which is 86,6 days!!

Introducing the crypto K.I.S.S. strategy

The crypto K.I.S.S strategy stands for Keep It Simple Stupid. Active crypto income aside, this strategy answers the question of "What would John Bogle do?".

It says that we should keep our selection of crypto holdings as small as possible and have as few transactions as possible, in the spirit of John Bogle.

This means if we have a fictitious portfolio of say $10k, we would invest it with a 50/50 or 60/40 split in the blue-chip cryptos BTC and ETH.

The crypto market is very aligned to the movements of Bitcoin, so there isn't much point to diversify into any shitcoin or anything else. It was in the past that altcoins would often crash more than Bitcoin, but the trend seems to have lessened lately, but it is still a consideration for not diversifying.

If you require some stable coin income, this may make sense to have 2 or 3 stables in case of any adverse advent. But it would not make sense under the K.I.S.S. strategy to massively diversify across the whole stable coin market.

This would also mean you would not invest in any particular crypto project because "you like the team/community/use-case etc." and it would mean also that you would not then spend $100 of your crypto portfolio chasing extra yield on a sub-layer of said token. You can see the transaction costs through slippage and fees adding up here for little benefit.

Doller Cost Averaging Bitcoin v. DJIA

Those following the Crypto K.I.S.S. strategy use DCA to return >89% over the last 2 years compared to just 10% for the DJIA. They have invested passively and have very few transactions.

Some may argue that they are not getting the full crypto experience by not investing in pools and losing 90% of their investment and hodling on until it hopefully regains value. But for Crypto K.I.S.S. investors, it's all about the returns than the emotion and adrenaline rush that active crypto investors get.

Will you give Crypto K.I.S.S. a chance or what strategy do you follow?

Thanks for reading.

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Please note

This article is for infotainment only and does not represent investment advice. Please DYOR before investing in anything.

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Avatar for mypathtofire
2 years ago