Following Ray Dalio’s All Weather principle of investing
“Institutional investors are coming in!!” You must be bored of that right now. At this moment bitcoin roves around $7.5k. I hope that is something we look back to in a few months and smile about. I tell my friends, when it comes to crypto (the way it currently stands), there are no experts. There could be a scam in crypto, but I don’t believe it’s gambling. If you’ve invested money and lost it, you still deserve accolades. However, don’t let the losses make you. Don’t say, “Never again in my life will I invest in crypto!” That is because you are only fooling yourself and setting yourself up for trouble. Your mistake was not putting money in crypto, your mistake was that you didn’t really know what you were doing.
Before we go further, let’s define the word ‘investing’. Investing is not buying low and selling high. Investing is not earning money for skill or time. Investing is when you put your funds in a venture and the funds yield you regular income without diminishing the value of your initial fund. Of course, the value of your fund might fluntuate against the currency but the income you receive. But it remains intact while it produces passive income. Trading is buying low and selling high. It is very similar to buying an agricultural product in the farm and then taking it to the city to sell it. You need to know which one of these you are doing.
Ray Dalio is the co-chairman and co-CIO of Bridgewater Associates, a very successful investment company. Not to long ago, I learned his philosophy and strategy of investing. According to him, there are 4 seasons in the economic cycle; inflation, deflation, rising economic growth and declining economic growth. His strategy is to diversify his portfolio into ventures that do well in each season of the economic cycle. And with that, his fund has been consistently successful through the years. That philosophy is what I try to make a copy of here.
This post is a guide for people who want to deal in crypto with big money and don’t ever want to be at a loss. This means the risk threshold is low and you may not get involved in the +150%, +89% rides. If you deal in big money, you shouldn’t be that greedy. The discipline it takes is quite simple.
First, restrict your dealings to 4 coins. This means all your holdings will be between these 4 coins at every point in time. The 4 coins include; bitcoin, USD tether, NEO and BNB. You can choose to replace any of these coins with another coin, but you must understand the reason behind the choice so you can pick well. These are the reasons for the choice:
1. Bitcoin is the market mover and market leader. Bull runs that doesn’t involve btc are many times just pumps. So, holding funds in btc positions you for genuine bull runs.
2. USD tether for the bear runs. You need to have funds in USDT to be able to gain the advantage in a bear market.
3. NEO because it pays GAS. If the market is down or up, at least you know you are getting some GAS on the side. Which most likely will pay for all the fees here and there.
4. BNB because it has one of the most awkward relationship with bitcoin. Plus if your account is on Binance, you will need BNB. There are a few coins that don’t ride in similar pattern with bitcoin. BNB is one of them.
In summary, you have bitcoin making money for you on the bull run. NEO makes money (passive income) whether the market is up or down and very useful especially when the market is flat. USDT is for the bear run. And BNB is for the awkward times. This means that when the market is having a bull run you should be filling your USDT bags. During the bear run, you should be filling your btc bag. When the market is appearing flat, you should be filling your BNB bag (at the right price). And when the market is awkward, you should be filling your NEO bag (at the right price). Just focus on moving your funds around those 4 coins and don’t ever try to get on a ride to the moon. Leave the moon target for those with small funds. However, even with this strategy, timing is still everything.
What is the percentage distribution? That is the big secret. It’s definitely not equally. I have my notion of what it should be for optimum gains but it is still theoretical. I have not tried this because I am not an “institutional” investor. But this is a rough idea of how many trading will be arranged from now on. The moon target still makes the thrill fun because I am still playing around (as far as I am concerned). But I hope for some big funds soon to try it out. Perhaps someone should write a trading algorithm based on this. How much is big enough for this? 20 btc (and higher) should be okay. But there no rule that says you must have something close to that to use this strategy. Remember, you are investing (or borrowing, gambling) at your own risk.
P.S. I can help you create actual investing goals and strategies in the crypto ecosystem. Definitely won’t be asking you to send me your coins. Just to help you arrange your thought, philosophy and discipline.
P.S.S. You can connect and relate with me on Twitter here
Cheers!