Excellent thread - thanks!!
I hacked together a quick Google Docs spreadsheet to play with the numbers for my own uses, and I'm in the process of creating a small website with an SSS-style calculator on it.
I'll keep you posted when it's up.
Topic: (SSS) - A Sane and Simple bitcoin Savings plan - page 8. (Read 84960 times)
Anything else is getting into trading and should be left to advanced traders, or perhaps with a very small percentage just for fun.
I agree as long as, like you said, it is a very small percentage. I was actually trading during the crash with a very small %. I lost
but still it gave me the sweet comfort of the illusion of control.
Thank you a lot for this piece of advice and for this thread.
For a 1 week bitcoin novice who is trying to get as much information on bitcoin as possible, and who is looking to invest as soon as my accounts get validated, this strategy is heaven sent.
For a 1 week bitcoin novice who is trying to get as much information on bitcoin as possible, and who is looking to invest as soon as my accounts get validated, this strategy is heaven sent.
Thanks for the input, gents.
I was thinking the goal was to maintain 80/20 ratio, but actually it should be to bring your holdings to this ratio on the way up, but not on the way down.
Anything else is getting into trading and should be left to advanced traders, or perhaps with a very small percentage just for fun.
I was thinking the goal was to maintain 80/20 ratio, but actually it should be to bring your holdings to this ratio on the way up, but not on the way down.
Anything else is getting into trading and should be left to advanced traders, or perhaps with a very small percentage just for fun.
Funny, I feel exactly the same way.
I've raked enough to be playing with "found money" now and the emotion is almost completely gone.
The crash in April was gut wrenching to me...too much emotion.
This correction...meh.
I've raked enough to be playing with "found money" now and the emotion is almost completely gone.
The crash in April was gut wrenching to me...too much emotion.
This correction...meh.
I never got into the trading concept in both times and I'm just grabbing my popcorn. When you're risk free; you're alright.
De-raking
If the goal is to maintain 80% of your portfolio in Bitcoin, what do you do when the price falls a lot (for a non-catastrophic reason)? If you had $80,000 in BTC and $20,000 in fiat, then the price halved, you'd now have $40,000 in BTC and it'd only be about 67% of your portfolio. Wouldn't you want to buy back enough BTC to bring the ratio back to 80/20?
Obviously there are limits to how low you'd go with this, but does this have any use or does even any rebalancing on price dips ruin the whole point of the rake/hedge?
If the goal is to maintain 80% of your portfolio in Bitcoin, what do you do when the price falls a lot (for a non-catastrophic reason)? If you had $80,000 in BTC and $20,000 in fiat, then the price halved, you'd now have $40,000 in BTC and it'd only be about 67% of your portfolio. Wouldn't you want to buy back enough BTC to bring the ratio back to 80/20?
Obviously there are limits to how low you'd go with this, but does this have any use or does even any rebalancing on price dips ruin the whole point of the rake/hedge?
Zang: I'm usually a big fan of your posts, but I think your de-racking idea is extremely dangerous. The whole idea of the rake is to allow you to enjoy the run-up, recover you initial investment, and emotionally detach from the bitcoins you are "letting ride."
I maintained a Zen-like calmness through this crash, I think in large part due to the SSS. By now I have raked* an amount roughly equal to my initial investment, and for some reason when the price rallies or crashes the dollars gained or lost seem ephemeral.
That being said, since I still earn a wage, I take 10% of the extra money I have from each pay cheque for "savings" and put this into bitcoins. This amount is now trivial compared to my long-term holdings, but I see it as a low-risk vote of confidence in the bitcoin economy.
*The best way to rake, if possible, is to purchase things directly with your bitcoins.
Funny, I feel exactly the same way.
I've raked enough to be playing with "found money" now and the emotion is almost completely gone.
The crash in April was gut wrenching to me...too much emotion.
This correction...meh.
Fantastic thread .... thank you !!
To make any significant benefit of de-raking, one or both of the following have to happen:
- Big enough rake-% to give access to more funds
- Big enough de-rake-% to give enough leverage in dips.
First of them makes a terrible cut in your EV in the long run.
Second is dangerous in final loss.
My gut tells that you should just keep all rakes and enjoy life.
- Big enough rake-% to give access to more funds
- Big enough de-rake-% to give enough leverage in dips.
First of them makes a terrible cut in your EV in the long run.
Second is dangerous in final loss.
My gut tells that you should just keep all rakes and enjoy life.
Yeah, that's probably wisest. Like most investment decisions, it really just requires the will to see it through regardless of how the investment plays out vs the expectations.
My gut tells that you should just keep all rakes and enjoy life.
+1
To make any significant benefit of de-raking, one or both of the following have to happen:
- Big enough rake-% to give access to more funds
- Big enough de-rake-% to give enough leverage in dips.
First of them makes a terrible cut in your EV in the long run.
Second is dangerous in final loss.
My gut tells that you should just keep all rakes and enjoy life.
- Big enough rake-% to give access to more funds
- Big enough de-rake-% to give enough leverage in dips.
First of them makes a terrible cut in your EV in the long run.
Second is dangerous in final loss.
My gut tells that you should just keep all rakes and enjoy life.
De-raking
If the goal is to maintain 80% of your portfolio in Bitcoin, what do you do when the price falls a lot (for a non-catastrophic reason)? If you had $80,000 in BTC and $20,000 in fiat, then the price halved, you'd now have $40,000 in BTC and it'd only be about 67% of your portfolio. Wouldn't you want to buy back enough BTC to bring the ratio back to 80/20?
Obviously there are limits to how low you'd go with this, but does this have any use or does even any rebalancing on price dips ruin the whole point of the rake/hedge?
If the goal is to maintain 80% of your portfolio in Bitcoin, what do you do when the price falls a lot (for a non-catastrophic reason)? If you had $80,000 in BTC and $20,000 in fiat, then the price halved, you'd now have $40,000 in BTC and it'd only be about 67% of your portfolio. Wouldn't you want to buy back enough BTC to bring the ratio back to 80/20?
Obviously there are limits to how low you'd go with this, but does this have any use or does even any rebalancing on price dips ruin the whole point of the rake/hedge?
Zang: I'm usually a big fan of your posts, but I think your de-racking idea is extremely dangerous. The whole idea of the rake is to allow you to enjoy the run-up, recover you initial investment, and emotionally detach from the bitcoins you are "letting ride."
I maintained a Zen-like calmness through this crash, I think in large part due to the SSS. By now I have raked* an amount roughly equal to my initial investment, and for some reason when the price rallies or crashes the dollars gained or lost seem ephemeral.
That being said, since I still earn a wage, I take 10% of the extra money I have from each pay cheque for "savings" and put this into bitcoins. This amount is now trivial compared to my long-term holdings, but I see it as a low-risk vote of confidence in the bitcoin economy.
*The best way to rake, if possible, is to purchase things directly with your bitcoins.
De-raking
If the goal is to maintain 80% of your portfolio in Bitcoin, what do you do when the price falls a lot (for a non-catastrophic reason)? If you had $80,000 in BTC and $20,000 in fiat, then the price halved, you'd now have $40,000 in BTC and it'd only be about 67% of your portfolio. Wouldn't you want to buy back enough BTC to bring the ratio back to 80/20?
Obviously there are limits to how low you'd go with this, but does this have any use or does even any rebalancing on price dips ruin the whole point of the rake/hedge?
If the goal is to maintain 80% of your portfolio in Bitcoin, what do you do when the price falls a lot (for a non-catastrophic reason)? If you had $80,000 in BTC and $20,000 in fiat, then the price halved, you'd now have $40,000 in BTC and it'd only be about 67% of your portfolio. Wouldn't you want to buy back enough BTC to bring the ratio back to 80/20?
Obviously there are limits to how low you'd go with this, but does this have any use or does even any rebalancing on price dips ruin the whole point of the rake/hedge?
Depends how well you want to sleep at night
Rebalancing is a different strategy and trades the possibility of gains for the possibility of the total loss of your portfolio.
Either way you should have a plan and stick to it: then you can benefit from the positive feeling of decision rather than the weak feeling of indecision.
De-raking
If the goal is to maintain 80% of your portfolio in Bitcoin, what do you do when the price falls a lot (for a non-catastrophic reason)? If you had $80,000 in BTC and $20,000 in fiat, then the price halved, you'd now have $40,000 in BTC and it'd only be about 67% of your portfolio. Wouldn't you want to buy back enough BTC to bring the ratio back to 80/20?
Obviously there are limits to how low you'd go with this, but does this have any use or does even any rebalancing on price dips ruin the whole point of the rake/hedge?
If the goal is to maintain 80% of your portfolio in Bitcoin, what do you do when the price falls a lot (for a non-catastrophic reason)? If you had $80,000 in BTC and $20,000 in fiat, then the price halved, you'd now have $40,000 in BTC and it'd only be about 67% of your portfolio. Wouldn't you want to buy back enough BTC to bring the ratio back to 80/20?
Obviously there are limits to how low you'd go with this, but does this have any use or does even any rebalancing on price dips ruin the whole point of the rake/hedge?
Hello Op, thank you very much for this thread. I want your honest answer to 1 question. With all your knowledge of bitcoin, from 0 to 100 what would be your honest guess about the probability of mBtc getting to 1000usd, and the probability of crash and burning.
What about the probability of going higher, but not as high as 1kusd per mBtc, before maybe slowly dying / being replaced / etc?.
What about the probability of going higher, but not as high as 1kusd per mBtc, before maybe slowly dying / being replaced / etc?.
I was about to write concerning this matter. So the answer is the OP in the new thread.
Hello Op, thank you very much for this thread. I want your honest answer to 1 question. With all your knowledge of bitcoin, from 0 to 100 what would be your honest guess about the probability of mBtc getting to 1000usd, and the probability of crash and burning.
What about the probability of going higher, but not as high as 1kusd per mBtc, before maybe slowly dying / being replaced / etc?.
Thank you.
What about the probability of going higher, but not as high as 1kusd per mBtc, before maybe slowly dying / being replaced / etc?.
Thank you.
The fact that I mined in 2011 and sold when it crashed hurled me into a deep depression I wish I would have looked
At this as an opportunity to invest and not so much a get rich quick scheme.
Thanks for the post!
I wish I would have lookedAt this as an opportunity to invest and not so much a get rich quick scheme.
Thanks for the post!
silversurfer, I think your son has a better chance of a much greater return if he just forgets about those 0.1 bitcoins for a few years and doesn't sell any. Silver is a nice alternative but it's potential is so much lower than bitcoin it's not even worth discussing. Silver is great to hedge vs bitcoins but with a so small amount as 0.1btc it's just better to hold on imo.
He has 1.2BTC already I gave him, he's holding that, this 0.1BTC is really a little fun, get him used to thinking about money, investments, hedging strategies, discipline, etc, and hopefully, he gets to stack a few shiny Silver coins, so this is just a bit of fun for him, if he did only have the 0.1 you'd be right, far better for him to hold.
Great and fun idea!
I think one of the toughest parts about the plan is the temptation to buy back in after a rake. Example:
- BTC briefly touches a new ATH at $1,000
- sell 10% for fiat
- BTC plunges to $500 a week later
- buy back in and hold for BTC to reach $1000
Assuming a strong belief that the new ATH is a realistic value for BTC, I for one would be very tempted to buy back in with the 10% I had just sold and wait again for BTC to double again.
In that case the SSS could be enhanced by a speculative component: 10% non-reversible rake and 5% reversible rake. The reversible rake would trigger a buy-back at a price point which e.g. is at half the price point at which it was used. - BTC briefly touches a new ATH at $1,000
- sell 10% for fiat
- BTC plunges to $500 a week later
- buy back in and hold for BTC to reach $1000
Assuming a strong belief that the new ATH is a realistic value for BTC, I for one would be very tempted to buy back in with the 10% I had just sold and wait again for BTC to double again.
E.g. assume a (USD/mBTC) scenario by starting with 10 BTC ($10k USD) : 1->2->4->2->4
15% conventional rake strategy at each doubling: (USD/mBTC, BTC, USD)
1, 10, 0
2, 8.5, 3000
4, 7.225, 8100
2, 7.225, 8100
4, 7.225, 8100
10%nonrev/5%rev rake strategy at each doubling: (USD/mBTC, BTC, USD)
1, 10, 0
2, 8.5, 3000
4, 7.225, 8100
2, 7.650, 7250
4, 7.225, 8950
The 10% acts as a hedge, the 5% acts as a time-based arbitrage from which you gain additionally.
I would allocate very little of the rake amount to buy-backs because otherwise a major benefit of SSS is forfeited - if bitcoin subsequently crashes to zero, buy-backs simply compound the loss.
The 10% acts as a hedge, the 5% acts as a time-based arbitrage from which you gain additionally.
Might you be able to simulate this with random price development? (I can only do it in Excel, and that way it'd take some time)
If you want to increase the gain via a time-based arbitrage you have to give up some of your longterm price appreciation for the benefit of short-term price fluctuations. It's always difficult to figure out which one is more attractive at certain times. If the price flatlines a reversible rake strategy with a small enough margin will do well. The problem is to be able to predict when the price flatlines and when it starts to rally. If you have too much of a rake involved and you miss the start of a rally, you basically forgo all the opportunity gains coming from that initial slope in the rally.
That said - a reversible rake strategy works best in a scenario where there are huge price inflations and deflations, as you accumulate fiat on the way up and btc on the way down without the need to call the bottoms or the tops. That said - I don't expect bitcoin to depreciate more then 10x anytime soon - other than becoming worthless because of some black swan event.
We know volatility in excess of the frictional trading costs exists. I think this suggests that a slightly more optimal strategy than the SSS must also exist. Like some others have alluded too, it could be an SSS plan (with sells perhaps spaced every decibel, rather then every doubling), but, most importantly where you have a trailing bid at, say, -1.5dB below your last sell point.
Think of it as an SSS plan + a money-pump harvesting the volatility that exists anyways.
I know Risto explained how the trailing bid removes some of your hedge, and I agree. My counter would be that for a given level of retained bitcoin wealth should bitcoin hit $100,000, and an assumed level of volatility, there is a strategy that would produce a higher amount of "raked-USD" than the SSS should bitcoin fail before it gets to $100k+. We just need to find what that strategy is. Ever since I read about Risto's SSS plan, I've wanted to simulate this and some other ideas. But, alas, my real job calls.....
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