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Hey pal,
2020 was a mission. I wouldn't have built an email list - if it wasn't out of quarantine boredom.
We've climbed up since.
I like hearing from people, so please reply to this email and introduce yourself in the new year.
Why? For two reasons:
- I like getting to know people around the world.
- I write newsletters to interact with people smarter than me.
Yes it’s really me, and I reply to all.
Have a happy new year.
-Rushil.
Insight - Fooling Ourselves
"You must not fool yourself, and you are the easiest person to fool."
This is a reminder to not fool yourself for the new year.
Treat your mind as if you were driving a car with a manual shift. Not automatic.
Manual cars make for better drivers. The added stress forces urgency of what you do and how you drive.
Deeper focus makes you a keen driver, compared to comfort from an automatic.
Monitor each thought that passes your mind - as if you were driving a stick shift.
Your brain on autopilot makes you prone to fool yourself.
After all, you're the easiest person to fool.
Investing - My Thoughts For 2021
2020 was an unprecedented time for the stock market. That goes without saying.
The US economy took major damage in March, the Fed intervened, and they've carried on since.
The future outlook isn't clear. That also goes without saying.
Keeping this in mind, I'm carrying on with my current strategy for 2021:
- Have half my portfolio in low-risk assets which I plan to hold for a 5-year window (index funds, ETFs, and value stocks).
- Balance the other half into risky positions, which I'll sell within the year or so (growth stocks, SPACs, or private equities I can get my hands on).
I'm a Libra, so this strategy feels right.
Portfolio Goals For 2021
The main goal is simple: I want investments that are worth more than I'm paying for.
The long-term goal is to compound my low-risk assets.
Difficult but doable - if I remain patient and don't interrupt unnecessarily.
The short-term aim is to gain non-linear returns from risky bets.
Difficult but doable - if I can widen my circle of competence.
The overall plan, and perhaps the most difficult - is to:
Make my portfolio antifragile.
For those who don't know the concept of antifragility, picture a hydra:
The hydra gets stronger the more heads are chopped off. That's antifragile. Something that thrives from disorder.
Having a portfolio that grows when exposed to volatility, randomness, risk, and uncertainty - is what I want to build in 2021.
It won't be easy, but it never is. Anyone who thinks it's easy - is stupid.
Innovation - A Watering Hole In The Desert
You don't need an economics degree to know what happens when demand increases with low supply.
Price goes up:
Bitcoin is complicated to understand on the technology side.
When seeing it purely from an investing point of view, it's a simple question of supply and demand.
People make the mistake of not seeing Bitcoin as an asymmetric bet:
When the potential upside is greater than its potential downside.
Consider this analogy:
Bitcoin Is Like A Small Waterhole In A Hot Safari
We know there will be a finite amount of 21 million bitcoins by 2140.
That's just the expected amount. Considering lost bitcoins, the real number would be ~18 million, making it 16% less BTC in rotation.
The water hole might dry up quickly.
Institutional Investors Are The Elephants Hogging The Waterhole
- Microstrategy purchased 70,470 BTC for $1.13 billion
- Square owns around 4,709 coins at the price of $50 million
All within this year.
These institutions aren't alone. Expect hippos, rhinos, and lions to follow. It'll be gradual, then sudden.
Grayscale added around 210,000 BTC in the past 6 months. For perspective, roughly 185,000 BTC has been mined in 6 months. That means Grayscale has bought more bitcoins than the amount supplied.
The elephants won't give other animals a chance to drink.
Bitcoin Miners Are The Rain - And There Seems To Be A Drought
The miners are not cashing out the bitcoin they've mined. There's an increase in miner unspent supply (BTC that doesn't leave the miner address). It's been rising since the last halving.
This will result to a bitcoin bottleneck the more miners plan to hold. There'll be a cut off from supply if miners be greedy (it's already rising).
The lack of rain won't fill-up the waterhole anytime soon.
Exchange Balances Are Dried Up Lakes and Rivers
There's a liquidity crisis for crypto exchanges like Coinbase, Binance, and Bitstamp.
Bitcoin supply on exchanges have been dropping 20% since January:
People are moving their bitcoin to more local spaces (hardware wallets) instead of relying on crypto exhanges. Less capital is moving into the exhanges as a result.
The lakes and rivers are drying up to a point where animals won't have access.
The Waterhole Is The Largest Water Supply In The Safari
Still skeptical? Bitcoin is now the largest financial service in the world by market cap:
It goes to show that owning BTC, even a little, can go a long way. That's what asymmetry is, and why you should consider being a part of it.
The downside will be you losing your money invested.
The upside would be owning a really scarce asset, which has potential to be the global currency.
Which side are you on?
Internet - Me Writing This Newsletter
The newsletter:
Me writing it:
On other memes:
Bitcoin:
Christmas:
How it went:
How it's going:
Inbox - 2020 Annual Review
I'm working on the first post for my website. It'll be a review for 2020 and what I plan for 2021. I'll share the review with subscriber pals once it's done.
Here's a short 30-second timeline of how my 2020 went.
- January 6: Cloud consulting internship for 4 months
- March 16–23: Poured all my money into the stock market declines
- May 1: Extended my co-op 4 more months. Got staffed on client projects forcing me to learn while doing
- June 27: Built an email list of 30 people and launched a weekly newsletter on my thoughts
- August 1: Negotiated a part-time (20 hours/week) employment contract to take fall courses
- August 18-September 1: Canada road trip with my pals Levi, Bersi, Morty, Cyrus (@coldcyrus), and Cassandra.
- September 24: Getting rid of Instagram, TikTok, and Snapchat on my birthday
It’s been an eventful year (even if lockdowns made things uneventful).
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