In 2020 I created an investing experiment to check if I can beat S&P 500 index and Warrent Buffett’s Berkshire Hathaway. It ended well, but the real challenge seems to be - is it possible to outperform Bitcoin? Let's see.
Interesting experiment to create an "all weather portfolio" Kristaps. So far it has been tested in bull market conditions of the last 7 months. Given the heavy allocation in bitcoin and its relative high volatility compared with the rest of the portfolio, I wonder how it will perform in bearish market conditions like the one that seems to be forming. Please keep us updated!
The "all weather portfolio" experiment was done in 2020 from May till November, but of course - in a bull market, and everything was going up. Now the situation is a bit different - both stocks and crypto are crashing in last couple of months, and with this new experiment investing 100% in crypto, I expect to see way more volatility.
Thanks for the reply. Do you expect that "all weather portfolio" will still outperform SP500 and Berkshire in this new situation? Btw, the new experiment is also interesting as it tests btc and eth dominance in the coming months.
The previous portfolio is liquidated - I was forced to stop that experiment, because of some regulations - eToro rules changed, I could not continue buying the same ETFs and for same amounts, but if it had continued - it would still outperform S&P500 and BRK.B, BTC was at $15k or so when I finished it, and just increased in price later. Even now after 50% crash it is at $33k.
And of course also with new experiment I would like to outperform S&P500 and BRK.B, will see how it goes.
Thanks for the answer. It is interesting on how this portfolio could absorb such massive fluctuations. Looking forward to the results of the new portfolio. Good luck!
Very interesting strategy, looking forward to seeing how it'll perform this year as some expect it to be "crypto winter". Do you have an opinion on N.N. Taleb's view on Bitcoin? Taken from his paper on BTC and cryptocurrencies in general:
''In its current version, in spite of the hype, bitcoin failed to satisfy the notion of "currency without government" (it proved to not even be a currency at all), can be neither a short nor long term store of value (its expected value is no higher than 0), cannot operate as a reliable inflation hedge, and, worst of all, does not constitute, not even remotely, a safe haven for one’s investments, a shield against government tyranny, or a tail protection vehicle for catastrophic episodes. Furthermore, bitcoin promoters appear to conflate the success of a payment mechanism (as a decentralized mode of exchange), which so far has failed, with the speculative variations in the price of a zero-sum maximally fragile asset with massive negative externalities.''
But even if we ignore long theoretical discussions full of assumptions, just looking at statement like "can be neither a short nor long term store of value" - it begs the question, what is meant with short or long term here? If we are not talking about centuries, but at available data of last 10+ years, then there is no other asset that was better at storing value than Bitcoin. And the fact that Bitcoin has not only survived, but grown and worked like intended with no disruption for 10y+ makes me think - that the longer it is alive and continues on this path, the less likely that it will die and go to 0 as Taleb is predicting.
Thanks for the reply and links to articles, they're very informative. I tend to agree with your reasoning - the empirical facts of it's growth and somewhat widespread support for it makes it rather difficult to imagine (non-apocalyptic) scenario where BTC goes to 0 and doesn't recover.
Interesting experiment to create an "all weather portfolio" Kristaps. So far it has been tested in bull market conditions of the last 7 months. Given the heavy allocation in bitcoin and its relative high volatility compared with the rest of the portfolio, I wonder how it will perform in bearish market conditions like the one that seems to be forming. Please keep us updated!
The "all weather portfolio" experiment was done in 2020 from May till November, but of course - in a bull market, and everything was going up. Now the situation is a bit different - both stocks and crypto are crashing in last couple of months, and with this new experiment investing 100% in crypto, I expect to see way more volatility.
Thanks for the reply. Do you expect that "all weather portfolio" will still outperform SP500 and Berkshire in this new situation? Btw, the new experiment is also interesting as it tests btc and eth dominance in the coming months.
The previous portfolio is liquidated - I was forced to stop that experiment, because of some regulations - eToro rules changed, I could not continue buying the same ETFs and for same amounts, but if it had continued - it would still outperform S&P500 and BRK.B, BTC was at $15k or so when I finished it, and just increased in price later. Even now after 50% crash it is at $33k.
And of course also with new experiment I would like to outperform S&P500 and BRK.B, will see how it goes.
Thanks for the answer. It is interesting on how this portfolio could absorb such massive fluctuations. Looking forward to the results of the new portfolio. Good luck!
Very interesting strategy, looking forward to seeing how it'll perform this year as some expect it to be "crypto winter". Do you have an opinion on N.N. Taleb's view on Bitcoin? Taken from his paper on BTC and cryptocurrencies in general:
''In its current version, in spite of the hype, bitcoin failed to satisfy the notion of "currency without government" (it proved to not even be a currency at all), can be neither a short nor long term store of value (its expected value is no higher than 0), cannot operate as a reliable inflation hedge, and, worst of all, does not constitute, not even remotely, a safe haven for one’s investments, a shield against government tyranny, or a tail protection vehicle for catastrophic episodes. Furthermore, bitcoin promoters appear to conflate the success of a payment mechanism (as a decentralized mode of exchange), which so far has failed, with the speculative variations in the price of a zero-sum maximally fragile asset with massive negative externalities.''
Thank you. Today saw Taleb & Bitcoin mentioned in Bloomberg as well: https://www.bloomberg.com/opinion/articles/2022-01-25/what-nassim-nicholas-taleb-gets-wrong-and-right-about-bitcoin
And a very detailed rebutal is available here: https://medium.com/quantodian-publications/a-rebuttal-to-talebs-bitcoin-black-paper-ea308ab78eb7
But even if we ignore long theoretical discussions full of assumptions, just looking at statement like "can be neither a short nor long term store of value" - it begs the question, what is meant with short or long term here? If we are not talking about centuries, but at available data of last 10+ years, then there is no other asset that was better at storing value than Bitcoin. And the fact that Bitcoin has not only survived, but grown and worked like intended with no disruption for 10y+ makes me think - that the longer it is alive and continues on this path, the less likely that it will die and go to 0 as Taleb is predicting.
Thanks for the reply and links to articles, they're very informative. I tend to agree with your reasoning - the empirical facts of it's growth and somewhat widespread support for it makes it rather difficult to imagine (non-apocalyptic) scenario where BTC goes to 0 and doesn't recover.