Questions relating our positions in LTC-ATF/LTC-ATF.B1.
One, you stated that you made a small loss of 4% versus an expected profit of 2-3% and that the loss was "entirely down to LTC rising by nearly 50% against BTC"(1). Yet your recent report 'b' (
link) states that out of a total of ~573.2 BTC total holdings, 64.11% are denominated in LTC, and most of that in cash -- a total of 11.44% of total value held on BTC-E and 44.6% held on LTC-GLOBAL ('a',
link). There's something wrong here. Since LTC rose by 50% against BTC, wouldn't that cause a much larger price swing than 7% of the fund? I can imagine that if the value of LTC swung by 50%, then that swing would account for a 64.11% * 50% change in NAV. Since, as you said, the price swing was the 'entirety' of the move. Can you please explain why your figures seem an order of magnitude off from your explanation of the cause?
Sure - what you're missing here is the impact of the bonds.
In addition to our HOLDINGS in BTC we also have a LIABILITY that's denominated in BTC - the bonds. When LTC rises it DOES reduce the value of our holdings in line with what you suggested - however a very large part of that is cancelled out by a corresponding reduction in the LTC value of our liability in respect of the bonds.
If you want to estimate the impact exchange-rate moves will have on the fund's value then the value you need to look at is NOT BTC denominated holdings but rather (BTC-denominated holdings - BTC-denominated liabilities). That's one of the major purposes the bonds serve - allowing us to have significant BTC holdings whilst our exposure to exchange-rate movement is only limited to the excess of those holdings over the value of bonds we have issued. The percentage of NET assets which are BTC denominated is given towards the bottom of the spreadsheet and is always in the 15% area. Be careful when estimating the impact of exchange-rates - as that percentage is maintained as the rate moves, so you can't just estimate it based on starting percent (I have bids and asks up that keep it near 15% even if I'm offline - unless it moves a LONG way).
Some of your questions in the bonds thread were based on you not understanding the above by the way.
Second, you state something very interesting in your report. You state that LTC-ATF profits are projected to be slim for reasons that "are some combination of being denominated in BTC/USD and/or being a scam/badly mismanaged."(2). I am curious. Do you actually have any evidence that something you are investing in is a scam? If so, two follow up questions -- one, why do you invest in scams? I'm willing to bet that you are referring to something like ZigGap which "turned out to be a scam". So maybe I should ask, "what are you doing to prevent investing in scams in the future"? The goal here is of course to quantify the amount of risk we need to attribute to poor management versus risk inherrent to cryptocoin investing as a whole.
As far as the LTC-Global scams are concerned (I was referring specifically to on LTC-GLobal in the quote) there's about 5 scam assets still in the main market. The recent ones being moo.cow mining and LHPOOL (LHPOOL is run by a liar/scammer who has taken over moo.cow from a different liar/scammer). My projection of this reducing profits isn't because we hold a lot of them (we hold zero of both) but because whenever an asset becomes a scam on LTC-GLobal it means one less security I can day-trade. As we have a mountain of unused LTC on LTC-Global this reduces profits in a way which doesn't happen on the other exchanges (where we have other options to use the funds on). This is a particular issue given that the price of most LTC-Global assets has fallen sharply (LTC-ATF being about the ONLY asset with a higher value than a month or two back) - and so the amount of LTC we use in trading there has dropped anyway.
We hold shares at present in precisely one security that I believe to be a scam (in fact I'm 100% sure it is). Those shares were purchased for a tiny amount each (total spent on them was under 0.1 BTC) have been written down to zero for weeks and still occasionally sell for 10-15 times what I paid for them (some sold in the last week). Obviosuly it's not in the interests of my investors for me to identify which security that is - as by doing so I may deter potential purchasers if they read here
There's a second 'dead' security we hold a position in - which I don't mind revealing. BTC-MINING on btc-co (Namworld's security). We hold a single share of that, sold to us at .007 (maybe different number of 0s - not worth checking). SHortly after that was sold to us in the last week, the security was locked by Namworld vs trading. That's the mining fund that lent nearly all of its cash to a scammer. Reason I had a decent sized buy up on that was that it still had 15 BTC cash left - and I was bidding at a price that meant just that 15 BTC cash (even assigning 0% to recovery of anything else) would give a profit. Unfortunately he locked it for trading right after it got sold down to our order.
On scams in general I DO on occasion trade in things I'm absolutely certain are scams - the most obvious example that's on the record in this thread being OBSI shares AFTER he'd defaulted (we actually had some when GLBSE closed). I was flipping those at a 100% profit each time simply because although I knew it was a scam there were a bunch of people who refused to accept it. In addition, in that case, there was a significant chance that (if GLBSE hadn't closed) the shares could have increased significantly in value anyway - depending on just how Obsi was planning to play the scam out. So, put simply, my assessment was that despite it being a scam trading it was +EV - which proved to be the case as we made more profit trading it in the few days before GLBSE closed than we lost by writing off the shares we held.
Similarly with ZIGGAP. If you look at the thread on it you'll see that I called it as a scam as soon as he sold his shares off cheap. At that stage I also marked our own shares down significantly. But I also then went and bought a LOT more cheaply - i mean 7 digits more shares (1 million or more - can't remember exactly how many but it was well over a million for a few hundred satoshi each). Because although I knew it was a scam I also knew there'd be plenty of idiots who didn't see it - and whose idea of buying some cheap was to pay 2-3 times what I paid. I sold all those at a nice profit (some at 20 times what I paid for them) which more than made up for the loss we made writing down the ones we originally held.
I actually PREFER trading something I KNOW is a scam than something I only SUSPECT is a scam - as it's much easier for me to price it properly (it has zero inherent value - I just have to estimate how many idiots there are who will pay too much for it).
As far as detecting scams is concerned I have no magic ability. The main thing I look at isn't what they say when discussing their security - it's what they don't say. Few will brazenly lie about things - it's the omissions that are where you look to find the problems. The other key I look for is "do I have sufficient information to value the security if I believe everything I've been told." If I can't possibly properly value it - even if I believe every word they've said - then I tend NOT to believe what they've said. The reason is that being able to value the security is something a prospective investor NEEDS to be able to do. If they don't provide information sufficient to do that (and I ONLY mean provide - I don't mean prove) then either they have a very basic failure to understand the needs of investors OR they're intentionally hiding something. WHilst I still can't distinguish whether they've crooked or incompetent I CAN be sure that they aren't a safe investment - which means being more cautious when trading them (buy lower, don't buy so many).
If I only traded "good" investments then LTC-ATF couldn't exist - there aren't enough good investments (by which I mean ones I'm 90%+ sure will perform better than just holding BTC/LTC) to run a diversified portfolio. The lack of good investments is compensated for by the lack of good investors - LTC-ATF makes nearly all its profit from investors, not securities. Which gets back to the original point - I can trade scams because there's idiots who will NOT accept they're scams until the asset issuer actually posts saying so.
Third question, minor question. You are on record stating that people shouldn't manage too many funds because it is confusing. You also state that your own RL committments have prevented you from doing the best job you can for your shareholders as the manager of LTC-ATF. You manage 5 securities already. Why bother introducing a sixth? Isn't that too much? If RL committments are already getting in your way, shouldn't you be working on closing down some of your funds instead of starting up a new project that you obviously won't have time to do a good job on?
Put simply there's a difference between not doing my "best job" and not doing "a good job". To do my absolute best job I would have to do this full-time - ANY level of commitment lower than that won't be my "best". Best and Good are two very different things.
My RL work is such that MOST weeks it takes very little of my time. Occasionally (maybe once every few months) there'll be a period of a few days to a week when it consumes a lot of my time - last week was one such week. We still made a 2-3% trading profit (remember the loss from exchange-rate would happen whether I was around or not) - which I think most securities out there would happily take.
Judging my performance on one week - when over 6 months of data is available isn't, I'd suggest, a good way to approach things. Nothing has changed in my work situation over that period - you'll find other weeks in the past where I've mentioned having less time than usual. That will continue to happen occasionally. I don't think there's ever been two days in a row where I haven't been able to spend a few hours online - all that being busy means is that I can't be around to maintain orders when out-bid and so lose out on traded volume.
You also seriously over-estimate the work required on most of the assets.
LTC-ATF.B1 - takes a 10 second check every now and again for any bids/asks to fill (bids only early in the week and IF I'm selling) then a minute to execute orders and convert currency if necessary. And 5 minutes once a week to calculate and pay dividends (the calcualtion is done in my spreadsheet anyway).
The 3 pass-throughs : Similar to LTC-ATF.B1 other than dividends being monthly. When I'm around and the LTC price is fairly stable I also place Asks - if I'm not around then we only lose profit, we don't make a loss.
LTC-ATF itself is the only one that takes any real effort at all - all the others I have spreadsheet sections that give me all information I need to manage them with minimal time. If I closed ALL the other assets then (aside from closing the bonds making running LTC-ATF impossible without major changes in policy about exchange-rate exposure) I'd save at most 1-2 hours work per week (exception being if I have to respond to PMs/Posts about them). They really ARE that trivial in terms of demand on my time.
The new security will need some up-front time from me (to get all relevant spreadsheets/reporting formats sorted) then will also be very low maintenance.
Fourth and final. It seems from a cursory reading of all of your reports that you have never taken a serious management fee. This strikes me as suspicious, because it implies that the fund is unsustainable. I mean, it's nice that you are doing this as a hobby but what are your plans to "go live" so to speak, and start turning a profit with this? Put another way, how much money are you willing to personally lose over this before shutting down? If it's not profitable for you to run, this needs to be explicitly disclosed. I for one do not invest in LTC-ATF precisely because of this. I know people think you are trustworthy and you've done nothing to damage that view with LTC-ATF so far... but that is not enough in today's world of Ian Bakewell and Aethero(ZigGap). What assurances do we have that this isn't some kind of amateur joke fund, and that you're serious about it?
You should really have done some math before posting that question. Or maybe what you consider a serious management fee is rather different to what I'm happy with.
First - bear in mind I own over 50% of shares in LTC-ATF. I'm also by far the largest bond-holder in LTC-ATF.B1 - with somewhere between 1/3 and 1/2 of all outstanding bonds. So even without a management fee I do OK if the fund does well.
Second - bear in mind that each LTC-ATF unit worth 63 LTC. At present that's about 2 BTC or $250. So the 1 unit I got the week before last wasn't as bad as 1 unit sounds.
To look at what I've made financially you really need to compare what my units are worth now to what they were when the fund started.
I started off with 194 units of the fund worth 10 LTC each.
I now have 161 units and sold another 125 (I think - not gonna check if that's exact number) when LTC was at its peak. For simplicty I'll value them all at 60 LTC.
In LTC:
Started with 1,940. Ended with 17,160 - a profit of around 15220 LTC
In BTC:
Started with 6.71 (exchange-rate .00346) . Ended with 549.12 (exchange-rate .032) - a profit of around 542 BTC
In USD:
Started with $38.54 (exchange-rate .041). Ended with $69,841 (exchange rate 4.07) - a profit of around $69,800.
So you tell me - is that REALLY so bad that it isn't worthwhile? I've never used ANY of my RL moey to buy LTC or BTC - all my crypto-holdings come from trading up from a few blocks of LTC I solo mined ages back. They sat there untouched during the period whilst I wasn't active on the forums - then I traded then up on GLBSE and doing some currency trading, spent a chunk of them on listing the asset, invested most of the rest and what happened after that is in the table on the first page of this thread.
Part of the fun/challenge for me was seeing just how well I could do with those few LTC I mined (think it was about 200). I'm happy with the start I've made.
Where are those profits I've made? Well:
A bit over half of them are in the LTC-ATF units I still hold.
I also have a good bunch of LTC-ATF.B1.
I have $10k USD denominated online which will be going into the new security.
I took $10k offline for a different project (that may well end up being listed in 6 months or so - something entirely different and unrelated to my current assets).
I have a couple of loans out.
I have some BTC/LTC in various places doing various things (no trading of securities).
Now the 15k LTC / 540 BTC/ $69K profit I've personally made may be trivial to you - and pale in comparison to the profits YOU make, but I'm perfectly happy with it as a return for the effort I've put in over the last 6 months.
As for how much of it I'm willing to lose before shutting it down : that entirely depends on how you're defining those losses.
For example, if LTC were to double vs BTC/USD every week then every week the value of the fund (in LTC) would drop by 5-10%. After maybe 10 weeks of that I'd likely call it quits, give up on LTC and cash out the remaining 50% of value for a few million USD and retire. Because THAT's what's actually happeneing in these "losing" weeks - our LTC value is dropping slightly and the BTC/USD value rising massively. I LOVE 'losing' weeks like that - I'd take those EVERY week if I could. The weeks I dislike are the ones where LTC falls by a lot - even though that guarantees a decent growth in our share price. An investment in LTC-ATF isn't just an investment in my trading skills - it's also an investment in LTC itself (which is NOT true for many other securities). When LTC gets stronger that provides us with big benefits immediately - and I add some value whatever happens with it.
Do I have some stop-loss (in any of LTC/BTC/USD) where i'd call it quits? No. I have no money tied up in the fund that I need for anything else. Obviously I'd prefer not to lose my investments - but if I do then it's not something I'd be losing sleep over. I take seriously the "don't invest what you can't afford to lose" mantra - and if you look at my investments you'll find that I'm also actively trying to balance between LTC/BTC/USD.
If I became convinced it was unprofitable (in the medium to long-term) to continue do what I'm doing then would I stop? Yes - in an instant. I believe in quitting whilst you're ahead - but ONLY when you become convinced you can't pull even further ahead.
