Ideabuds Portfolio Allocation Strategy
Tags: Portfolio Management, Eth, Btc, Allocation, Crypto

My desired portfolio as of 20k Breakout:

How did this thinking come to be? I’ve given this a lot of thought…

After reading this tweet: https://twitter.com/CryptoKaleo/status/1341951735364022273

I responded with:

Many people had various allocations and you can see in my tweet what I wrote, 60/30/10.

Then later in my podcast that night after much consideration I also said the following allocations were equally valid:

1/3 each to BTC, ETH, ALT

50 each to BTC and ETH

60 / 30 / 10 BTC, ETH, ALT

All Equally valid.

For me, I want to ensure 60% of my money goes to locking in my “Share of Global Wealth” (as I now conceive that is what BTC truly represents) before it goes to 100k, 200k, or 400k in 2021 and largely makes my USD income to meaningless. Since my USD income in BTC terms is relatively meaningless to the amount of BTC I already have I have to ensure it is not lost betting on alt coins.

My USD income in BTC terms. That is an idea in and of itself. Let me explain.

My goal is to hit 21 BTC as my wealth goal over the next 2 years or 5 years? Depends how much solar I can sell. Why 21? Then I’ll be 1 of only 1 million people in the entire world who can say they have that many. Essentially 1/8000nth of the population can say that. I’m “one in a million.” Kind of a cool idea I thought, and attainable, and not so enormous as 100 BTC.

So I’d like to take the certainty that I’m a good chunk of the way there as I mentioned: essentially “mining BTC” out of USD labor hours will create exponentially decreasing returns as BTC rises. This is the idea of my “USD income in BTC terms.”

My thesis is this. If I will be able to earn (“mine” from labor hours) let’s say 1 BTC (25k of USD) in January, by December I’ll only be able to earn .1 BTC with the same hours (still 25k of income in Dec). This is because BTC will now cost me 250k each. That means my January work and earnings represent an entire year of work and earnings in 2022. Put another way work becomes far less profitable in the next few years, and I will turn into a full time investor. This next 3 months are going to be super important in earning USD. That also means I should take on as much debt right now as I can possibly stand, and put it all into BTC and potentially even make a leveraged bet on BTC. More on that later.

So, what about Alts and ETH? In a way, I consider ETH just like BTC. It’s not mind you: BTC ensures your rank in global wealth while ETH is a stock bet on how much better it will do vs. a guarantee which BTC offers. I’m sure many investors will balk at this “guarantee” but I do not care. Buying BTC guarantees how much BTC you own. I don’t care what the dollar value is anymore. The world has changed we are in year 0 of After Saylor (AS). I will stake my life on this idea. But I believe ETH will continue to keep up with BTC over what’s to come. The rough 32 -35 ETH to 1 BTC will remain intact for a while. There will be dominance fluctuations, but ETH is very safe as well. As I’ve written before in my first post to this blog history would show you it will fall to 1 BTC to 8 ETH at the peak of the Alt coin DeFi boom of whats to come.

In the short term though with capital flows dominated by institutional buying BTC I can’t go there yet. I’ve got to lock in my BTC, because I believe that will be the story of 2021.

Now on Alts…

My current ALT portfolio after some reconstitution and condensing…

I still want to condense further as you can see its not in line with my desired play, but will be working on getting these trades done this week.

Choosing and Managing the ALT Portfolio

See the trick here is picking is very tough. If you pick right you would be better off going all in on one, but its a tough ride to bet on one, see BTC go up then feel you lost your BTC fortune. I don’t want to do that with more than 1/3 of my money. That’s my personal preference. There is definitely validity to just going 100% alt coin with some portion of your money, but to me its just not a risk worth taking when BTC is a rocketship enough and like I said a LOCK on how much BTC you own in the total supply of BTC. Its truly the cash of the future. The only reason you care what the world decides the USD value of it is is so that you can sell it high and maybe buy it back low and increase your total quantity of BTC! Trading away my BTC is something I will forego, but I will buy puts on it at strategic times, so that I can for instance put it to the market when it drops from 200k to 100k, which is a move I think we might get, thus doubling my BTC for the cost of the put option. Read on for more on that below.

Of the Alts, I think some should be in XLM, but perhaps not a ton, in a way it’s has a long history of base and as William O’Neil writes in his CANSLIM formula we have broken out of a very long base and that is when superior returns are generated in stocks. I plan to use the CANSLIM method for selection of Alt coins. I also did just do a Warren Buffett value buy on RWS, I own .5% of the entire currency. That will likely be the wisest investment I ever made.

However, CANSLIM is for growth stocks and has been a great formula for investing and I think it is transferrable to cryptos. Betting on them is much like stocks. Breakouts are valid in crypto as well. I am definitely a fan of buying stocks that are showing strength and breaking out.

XLM is one of those. Also on my list is still SNX. Anyway, I believe you have to play these stocks as well because and here is the point and loop back to the USD income thing.

→ The upside to gaining BTC is actually there vs. USD income of labor hours will virtually go to noting as BTC goes to 200k. My labor will be 1/10th as profitable as it used to be, and end the majority of my income BTC gains. No risk there though so I’ll continue to do that with my time as well.

Solar deals and solar investments will be a wonderful thing to secure a Dividend yield type of guarantee on your continued income no matter what happens in crypto. I like this as part of my eventual dumbbell approach, but solar $ investment is for 2022 when BTC and Alts have run to the moon and it is wise to divest some of the Alts into BTC and some of the Alts into Solar, and potentially ETH into solar as well. Solar will solidify my gains in a real asset once crypto may begin to cool off and the world is radically different, hopefully dodging a bullet of the natural crypto crash — that is just how it moves.

Solar would just be a great asset to own and diversify the portfolio so it hopefully won’t fall so hard. As I stated above, I plan to cover 100% of my gains with put purchases at each of my price targets 100k, 200k, and 400k, and I will likely scale into them in a method I’ll need to create. The key will be to gain BTC even when it falls. I am curious what the cost of puts will be, and will need to study hard how to implement puts. This a super crucial part of the crypto fund investment strategy. I will likely employ an options specialist or take the entire portfolio to someone to implement this wisely.

Returning to XLM, it is a strong performer breaking out of a base with potential to fill the XRP void. I will list it among my Alt coins that are showing strength and have broken out of long term highs, XLM doesn’t need to have broken out of ATH the way SNX needs to break ATH. SNX ATH was not as long ago as XLM ATH, so SNX has a shorter basing period and is relatively less certain what the true price of it is, therefore breaking ATH being a stronger break compensates for SNX lack of history vs. XLM. XLM fair price was about .07. Now we are up about 100% which is sort of what BTC is up from its previous set point of 10k. XLM has I think a much better lever than BTC, we will see. If ETH gas fees remain high XLM and STAKE and DOT, MATIC, are all in that gas fee index I will create.

So what about ETH?

See with ETH I consider it safe like BTC, but I’m getting my safe function from BTC. I don’t need to have ETH equal to BTC, because its almost like the bearish side of my Alt side, which I’m bullish as hell on (Alts) right now.

I’m not sure if that logic makes sense but its sort of like buying power for Alt, and I want to raise ETH levels once I think my Alt is spiked and deploy ETH when I think I see an Alt that is begging for a position. Right now I’m bullish on many Alts so my ETH is low. I want to perhaps have more Alt than ETH right now. I think it makes a lot of sense to have equal ETH and Alt because you can also pair your Alt with ETH 50/50 and get staking rewards. In that view, 60/20/20 is a good move. Where that thinking fails is that you can’t run a node if you stake your ETH with Alt and put in yield farms which take on much higher risk of hack. Having your own ETH and staking it on your own node is a lock. Staking rewards (think dividend yields) are lower at around 18%? on ETH nodes. To the regular investor I could see a love for this play alone. Just select this as one of my fund offerings. The value proposition for the investor would be, I’ll run the node and stake your ETH there and manage the ETH node for you. None of your capital will be at yield farm risk, which is huge.

For me, running a node will definitely comprise some of my ETH.

O’Neil’s CANSLIM

I’ll plan to choose at most 4–5 Alts that I can follow, know a lot about and use the CANSLIM formula to manage the positions using crypto indexes compared with my own created indexes as a proxy for the function of the S&P in O’Neils method.

That is my plan. I will treat ETH like cash and not let it go below 25% of my 40% that is on the ETH / Alt side. 60% to BTC to start and then each month take my gains from Alt side and deposit them to BTC to pile up and to lock in my profits along the way.

The Alt side will fluctuate at a minimum of 25% ETH to a max of 75% ETH, depending on where we are in the cycle.

Once we get a 50% drop in BTC, we will start rebalancing BTC back to ETH / Alts.