The importance of portfolio diversity

The snippet below represents the top 90% of value of our crypto portfolio. The crypto currency Jewel is one of two I invested in last November. The other is Harmony (ONE token). They work as a pair in a game called DeFi Kingdoms which I spend about an hour a day “playing”. Characters, purchased for Jewel tokens, go on quests and earn income. They are NFTs. Also within the game is a “garden” in which you sow seeds. The seeds are a liquidity pairing of Jewel and ONE.

These currencies peaked in Jan22, less than two months after I committed funds, and our holding almost tripled. Since then, Jewel has tanked until recently by 80%. I couldn’t figure out why our holding was only down by 20%, until it dawned on me how much income we were making from the game. The interest on the currency in the garden on 19Nov21 when I first invested was 1,250% APY equivalent. It is still 326%, having fallen to 250% but that has increased recently, as is the TVL locked. More importantly, my heroes have been creating income to the tune of around 5% a week of their value. It is quite a complicated equation, but this week after a huge rise in Jewel value in USD, we are up from the start by 21%, and if the Jewel ever did return to its peak, we would be up 328%. If its value stands still we may continue to earn about 5% a week from the NFTs whose quantity I have been able to double without adding any further capital to this game.

It will continue to go up and down like a yoyo but I expect it to become an increasing proportion of our portfolio which is already far too high. I will be looking for opportunities to divest soon, but only by as much as it has increased by. Ideal target is when it gets back to double the original investment, then sell half of it, so that the entire holding cost nothing.

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I admire your control over crypto which to me is an alien concept I cannot understand. And no, I don’t want to learn either because I’m deep into a FX 80% PROFITABLE STRATEGY.

Nice portfolio! I have a similar portfolio just a few different coins like matic, bnb

Phewwwwww. That would be incredible.

Smart move.

Quite balanced portfolio :+1: but it seems strange that you hold 15% XRP but don’t have any NFTs which are extremely popular nowadays. Have a look at haterace. In terms of gaming mechanics and reward policy the game is absolutely worth your attention, my opinion :wink:

And just to show - diversity cuts both ways. Despite DFK Jewel losing nearly 90% of its value, I continue to trade the Jewel-based NFTs, maintain Jewel in the gardens at 300% APR, whilst also boosting Jewel in the Avalanche gardens to the tune of nearly 1,000% APR. This is a really turbulent storm between ridiculous gains in Jewel value trading and liquidity pairing Jewel versus “impermanent loss”. The only determinant is how impermanent the losses are - days, weeks, months or millenia? :rofl:

Thankfully all crypto investments are funds I am prepared to lose. I said that back in 2020 and I maintain that healthy cultural attitude. Can we really expect to do a 100X without the parallel expectation of total loss?

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Let’s say you do (which I hope you won’t) end up losing it all, what’s the mindset there you think? Like it was fun while it lasted? Good learning activity perhaps? Exciting hobby? Thinking about times like these when all the markets are down lol.

Hi,
The mindset (actually the strategy) back in 2020 was to invest up to 5% of our wealth in crypto. We only managed to invest about 3.5% at the most until the actual exceeded the plan by 200%. Since then we have not moved fiat funds either into or out of crypto.

We now reach an interesting time. We are still cash positive in our crypto fund but now approaching the end of our second year, we are only about 2X since the start in May 2020. So to date we still doubled our funds invested in two years which is a 42% per year compounded. It reminds me of 1999 to 2002 when our property portfolio doubled, and our capital went up 6X. With those kinds of historical returns, that will perhaps explain why our “mindset” was more about diversification to include 5% crypto in our portfolio, and not about fun, exciting hobby. Now is the time to move more funds out of silver, and make that other 1.5% available to get back into more crypto - with about 100 times the knowledge about the sector than I had two years ago. :joy:

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Compared with my post of 27Mar22, note that the combined Jewel and Harmony has fallen from 31% to 12% of the portfolio, whilst BTC has risen from 28% to 38%, neither of which I have traded since March.

Today is a great example of why diversification is so important. If I only had say Luna, or was heavy with a latge % of just Luna and say another cryptocurrency, I’d be even poorer today!

Man, compared to all the losses I’m seeing across all markets right now, this is REALLY GOOD.

Yes as I talk to you while eating instant ramen. :joy:

Last night I bought more Jewel :crazy_face:.
This “DFK game currency” is down 94% from its peak. Yesterday I bought my 111th Hero (NFT) in the game and have sold 61 of them for an average “business plan” mark-up that equates to a plan to double the quantity of tokens per year.

You may well ask the question "What’s the point of doing all that buying and selling work to make a trading margin on an asset that tanks by 94%? My point is that the on-plan doubling of the quantity of Jewel owned by active trading achieved its objective. This is one of three potential income sources from NFT investments that I first started on 1Jan2022. The other two potential income sources are the in-game income earned by the Heroes every time they participate in a quest (estimated at 5% to 10% per week of Hero value in Jewel) and the third is “growth of Jewel in BTC terms” which is the -94% value decrease in USD terms, which is about a -50% decrease in BTC terms. DFK (Jewel and ONE) were only ever intended to be "up to 20% of our portfolio, and that combination is now 12% in BTC terms. I still am of the opinion that the reward / risk ratio of this component of our crypto portfolio is the best we have. If I am wrong, I am wrong. I do not think the token will disappear. It may well languish around the 95% loss, or even get to 98% loss, but I believe the root cause of the collapse of Jewel was a known “work around” that was unethically applied to the Jewel lock in period that was not caught early enough, and whose impact was far greater than expected. A series of errors of judgment of tokenomics impact in a fast moving environment I have faith in the Dev team to continue world class development at breakneck speed. At the end of the day, who gets to be exempt from all risks? Banks? National Treasuries? Stocks?

I had to ask myself if this is chasing falling knives, but decided this was more to do with my faith in the longevity of the game expansion cross-network, and in the absence of any other crypto to concentrate on I made the exchange.

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This perspective right here is crucial.

Good for you. I on the other hand, am pausing for now as I no longer have cash to deploy lol. I already have so many dips I need chips now hahaha

I feel for you. No doubt you are on the right path, and you have soooooooooo many more years than I in which to achieve that dream.

How I have internalised this with recent events?

When we did a mass “onramping” to crypto back in May 2020, and a further increase in about August 2020, my wife said “gosh - should we be putting more than 5% into crypto?” I said that part of our plan was to eventually remove all of our capital if it did grow that much faster than we had planned", so we stopped at 3.5% instead of on-ramping 5%. Now I have started contracting again after my operations during the past 15 months, and feel well enough to continue that contracting work, it’s a bit like Christmas. Hindsight is wonderful, and although we bought into BTC at between $10K and $20K so we have been protected (so far) against the predicted carnage that has happened, I have internalized this as a lesson learned, that has yet to put us in deficit, and can now plan a slower, more gradual “dollar cost average” approach to the next 3 years, whilst improving our “trading contribution” at a slower pace than we have been doing since Jan2022. Looking back our baseline crypto “plan” was to achieve a 25% per year ROIC. At peak, the 6X result made the plan seem laughable, but the long term goal is still 25% per year ROIC. And that is because if we achieve that we will have a “more than comfortable” retirement. Roll on inflation, It is our friend. We have highly leveraged property that took a beating for over a decade. It seems that experience may soon be long forgotten. Three times in my lifetime, UK property values have doubled over 3 years. With a bit of luck, we may be in sight of the fourth time that may happen. Just waiting for the banks to raise their first time buyer offers to 100%+ of valuation. Muhahahaha

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