Which is better – QUANTITY or QUALITY? The answer you’ve always wanted to know.
The storm has blown over and the clouds are clearing.
In my unbridled enthusiasm I thought it might blow over in the space of 24 hours, but now some 50 hours later there are real signs that the storm is passing and it is time to measure the wreckage, take stock, learn the lessons and move on.
Compared to the last storm that blew through soon after I started trading (the one that looked like it would culminate in wiping out 22% of my portfolio at one point) the damage was mild. There was a downturn and of course my portfolio shrunk, but it is now well on the way to bouncing back. This was helped in part by the leveraging of falling currencies off DAI (see my last post) and it brings me to the main point of my post for today.
Over the last few weeks and particularly in my posts, It’s Not All About the Money and Crypto and Newton’s Third Law of Motion and to some extent my most popular post to date My TEZOs Coin Jar = Pure Delicious Profit! (thank you to you the Public0x community) I have made the point largely from a theoretical point of view that ultimately it is QUANITITY (the amount of Crypto held) and not QUALITY (the value of crypto held) that matters.
Several weeks ago my Crypto holdings were very small and so as the market price experienced a downturn they were tossed and turned by the waves and battered by the wind. I was worried that my little boat was going to get swamped and I would go down and ultimately drown.
So what made this time different?
As those of you who read my posts regularly and watch the market I am in love with TEZOs. Such is my special bond with it that I even have my own way of writing it too! I never refer to tez or XTZ they are TEZOs because they are mine.
In the last couple of weeks probably few other currencies have experienced such dramatic movement on the market. Firstly out of nowhere it broke out of the £2.2x – £2.3x range and wouldn’t stop growing. Where and when was it going to stop was the question buzzing in my mind as the price helped to drive the value of my portfolio into orbit and then Tuesday (18th August) came and with it came a massive downturn and among the worst affected was my TEZOs as they began to settle in a downward direction). From a peak of £3.35 they bottomed out at £2.67; a downturn of 21%. This is comparable to the first storm I faced, but get this…
… and this is the most important thing I am going to write today….
Despite the downturn the value of my TEZOs held, NEVER, dropped below the amount I had invested in them. Yes of course my wallet shrunk, I would be lying to say otherwise and a lot of the profit that I had been counting earlier in the week disappeared, but the value never fell below the amount invested.
How did I manage this?
Again those of you who read my posts know that I pursue TEZOs aggressively and take every opportunity to add them to my portfolio, almost with every trade I make. This means that I have been cumulatively adding to my TEZOs wallet, often with pure profit that I have milked or suckled off the top (follow the links to see exactly what I mean). My TEZOs are also staking which can only help too.
I have taken hits in other areas of my portfolio, in particular my Augur holdings that are now bouncing back, although I believe this will only be a short term setback as the market settles before it goes again. Funnily the sheer number of TEZOs I hold actually not only meant they held their original value, but they reduced the impact of shrinking prices across my portfolio.
As I said yesterday I love my TEZOs
So in conclusion for today, I cannot state strongly enough that the real way to grow a portfolio is to focus on QUANTITY. This gives a constant (and increasing) multiplier that will drive the value of your portfolio up whatever happens to the price.
Just to illustrate
Imagine that at the beginning of a month I hold 100 TEZOs valued at (£300.00 or £3.00 each) and I aggressively leverage an additional 30% over the month. At the end of the month I now hold 130 TEZOs. Now imagine a downturn in prices. So long as my wallet retains a value of £300 I haven’t really lost anything. Consider the following:
Adding thirty percent to your TEZOs fund means that it needs to make a massive shift for its value to go below the original investment value. Yes your profits get wiped out, but at least your holdings are stabilised.
And that my friends is the lesson for today.