Beating the market
24th Jan 2022
To be honest with you I am not heavily invested in crypto. I am very interested of course and believe that the future potential for crypto assets such as 'Bitcoin Cash' could be huge.
This is a plausible reality but of course it is impossible for anyone to forecast how things will be in say 10-15 years time.
I like to have enough crypto to benefit from exponential growth, but also not so much that I would lose sleep in the event of a sudden downturn.
I am more heavily invested in stocks and shares than crypto and began investing shortly after the economic meltdown in 2008 caused by the sub prime mortgage crisis.
I decided then that I would take advantage of the fear and panic and expected the market to recover over time.
I invested in a index tracker fund which continued on a downward path for a while but recovered swiftly and my strategy paid off.
I took some profits, put them in a savings account where they would be safe and left invested the value of my original investment.
One thing I have learnt over the course of trading stocks and crypto assets is that you need to have a plan, a strategy which you believe in and can stick to.
Do some proper research before investing and remember the reason why you invested in that stock or crypto asset in the first place, if you strongly believe in the value of such an asset or stock, do not panic and sell at a loss.
As a rule of thumb I say to myself, put the smallest amount in the highest risk, and diversify as well.
I have mainly invested in funds which I have listed below.
Legal & General US Index
Fundsmith Equity
Sanlam Artificial Intelligence
Invesco CoinShares Global Blockchain
Lf Lindsell Train UK Equity
BNY Mellon Global Leaders
BlackRock Global Long/Short Equity
The interesting fund among these is the 'BlackRock Global Long/Short Equity Fund'
This fund aims to achieve growth under any market conditions by investing 'long' for example in some companies and 'short' on others.
By going 'short' on a number of companies this fund can achieve positive returns in a falling market but also means that it will not rise as much in a climbing market.
This fund aims to achieve stable growth and be less volatile.
My strategy has been to take some profits when the going is good on some of my funds and stocks ie 'trim my positions' and 'limit my exposure to risk'.
With the current swift downturn in tech stocks this strategy has served me well and my blacrock long/short fund is currently only down by less than 1%.
This fund is basically a hedge against a falling market.
I have also taken a small position in gold by investing in 'The Royal Mint Physical Gold ETC'
Gold also tends to do well in times of uncertianty as it is seen as a store of value. I think it is a good idea to have a small holding of gold to have as an asset which behaves differently from equities.
I have peppered my portfolio with a few individual stocks which I have listed below, some of which I took profits and closed my postions before the recent tech downturn.
AAPL (Apple)
V (Visa)
PYPL (PayPal)
MA (Mastercard)
MSTR (Microstrategy)
ETSY (Etsy)
SQ (Block)
HIVE (Hive)
OCDO (Ocado)
HOOD (Robinhood)
COIN (Coinbase)
Below I have explained a little bit about some of the companies I have invested in and my reasons for doing so. I have also included a link to each of their websites so you can check out these companies yourself if you wish to do some research.
Apple for me is a stock to hold for the long term, they are a huge company and have a whole ecosytem for which many are tied into, they are a fashionable and trendy brand too with potential for significant growth for many years to come.
Microstrategy is a company which has invested heavily in Bitcoin and therefore their stock price is affected to a large extent by the price movement of Bitcoin itself, therefore it is volatile, but also it can be a stock worth buying in order to get some exposure to the crypto market. If you believe in the future of Bitcoin.
SQ (Block) Is another company which is heavily invested in the crypto market, they enable buying and selling of Bitcoin via their 'Cash app' and also give you the ability to spend your crypto assets via a 'Visa' debit card connected to your account.
Hive is a canadian company which is the first publicly listed crypto miner, they have invested heavily in state of the art mining equipment and have a huge potential, though of course their future success is dependant on the future of crypto itself, therefore it is risky. For that reason I only have a small position.
https://www.hiveblockchain.com
Coinbase is one of the best known crypto exchanges and I believe it has the potential for huge growth. They make most of their money on the fees they charge for trading crypto assests, so their stock price is not directly corralated to the price of crypto itself.
I closed my postions in SQ, ETSY and MTSR at a profit a few months ago and also trimmed my positions in APPL, V and PYPL and moved the cash into my Blackrock Long Short fund which has acted as a parachute during the tech downturn.
I still believe that these companies have a bright future ahead which is why I invested in the first place, though for the time being I am watching from the sidelines.
With the current energy price crisis and possible conflict in Ukraine there is a lot of uncertainty around at the moment, but in reality, has there ever been a time when there wasn't?
I can't say I have always got everything right while investing and my position in HOOD (Robinhood) is currently down 73%.
Thats the thing about individual stocks, they can offer great returns but are also risky, thats why in general I prefer to invest in funds in order to spread the risk.
Thankfully my position in HOOD (Robinhood) is small so I am not overly concerned. For me it is not worth selling at a loss and trying to guess the market, I prefer instead to stick to my strategy of putting my smallest amount in the highest risk asset.
My strategy to beat the market is to diversify, take some small positions in higher risk assets, invest in companies that you believe in and understand, take profits and trim your positions from time to time and invest them in a safe haven such as gold or the 'Blackrock long short fund'
Analyse the market for yourself as even the best pundits get things wrong.
Don't let your emotions take over, stick to your strategy, don't trade too frequently be patient and wait for a clear opportunities.
Disclaimer: This is not financial advice, it is only my opinion.
I am only human and don't get it right all the time. I am just sharing my thoughts with you. Please do your own research so that you are fully aware of the risks of investing for yourself.
Disclosure: I am invested in all the assets listed in this article and am not receiving any reward or incentive for writing about them.
If you made it to here, thank you for reading, you can check out some of my other articles here.
https://read.cash/@onlymythoughts
Article is my own
Pictures courtesy of Pixabay
