My Investing Journey with Passive Income, Stocks, and Cryptocurrencies!

Month: June 2021

BONDS at MAX BEARISH MOMENT

I’ve recently started adding more bond funds to my portfolio. I haven’t done this in about two years now.

This goes against what everyone is saying, it’s assumed both inflation and interest rates go higher from here. Many believe that since the interest rates are already so low, that the upside on bond funds is seriously capped.

However, a few things:

1)The FED is still buying over 80 billion Treasuries a month and has committed to doing this. This will drive interest rates down if it continues at the same pace. My prediction is the FED continues to buy more until it owns an even larger percentage of the Treasuries market (reducing supply).

2)The 10 year is at 1.45% as of today, it can still fall back under 1% and lower. Keep in mind the low last year was around 0.5% I believe people are wrongly discounting that this can’t happen from here.

3)Intermediate and Long-term Treasuries have a NEGATIVE correlation to the stock market. They offer protection and cushion to the OVERALL PORTFOLIO performance.


SO WHAT DID I DO?

I started a new position in TLT. As far as bonds go, this is of course the most risky move, as it is the long-term duration and most sensitive to interest rate rises. On the other hand, it’s the one that stands to earn the most if interest rates fall again. I believe they will.

Just a quick mention, I bought TLT back in December of 2018 and rode it for some INCREDIBLE gains all the way until the end of 2019. Remember this is where the FED tried to raise rates but it caused the market to correct and they were forced the other direction.

My prediction is that something similar will happen over the next year or rates will go LOWER from here. I have no way of knowing for sure, but I suspect some of the inflation we are currently seeing is transitory as the FED has said. Much of it is due to supply line issues, and in some cases, not enough workers available to do the job of getting all of the materials.

I’m also still adding to my VBILX position in my ROTH IRA. This is an intermediate bond fund I’ve had for about a year and half now. This is a much safer choice, although it has a yield of over 2%. This is because the quality of bonds it invests in is a bit lower. VBILX is pretty close to a “cash account” like a savings with minimum downside. To reiterate the risk here is the return gets eaten by inflation.

I will end by saying I don’t think bonds like TLT are something you buy and hold forever. I do strongly believe bonds have a place in anyone’s portfolio and I can’t see myself ever getting rid of them.

“You can’t time the market” is a saying commonly reiterated. Yet, by not holding bonds, one is timing the market. They are assuming the insane bull run of the last decade will continue, they are assume bond yields MUST rise. However, we are in uncharted territory as a nation with the FED expanding is balance sheet to unprecedented levels, with valuations of some stocks at insane levels, with demographics and political tensions we haven’t faced before. Who knows what will happen from here? I don’t. That is why I’m choosing to hold bonds regardless if most are speaking out against them.

Decred Cryptocurrency

DECRED: Why This Cryptocurrency is my favorite

1)A FIXED SUPPLY-21 MILLION TOTAL SUPPLY. With 57.49% staked that leaves only around 5.4 MILLION Currently left to buy. However, this is not counting those that are in wallets that have not been staked. So, that means even less DCR is available for purchase. This makes it potentially more scarce

2)Top of it’s class GOVERNANCE-Decred makes you feel like a partial owner because you get to vote and have a say in things happening on its blockchain. With many blockchains, the developers and people in charge make it up as they go along with no input from coin owners. Regardless of how much you own, you don’t have a say in so many other crypto projects. Governance is there to prevent things like FORKS.

3)SECURITY-Since Decred is a hybrid blockchain, both Proof of Stake and Proof of Work, this makes it incredibly secure. It is 41 times more resistant to a double spend attack!

4)NOT TRYING TO BE EVERYTHING TO EVERYONE-Some projects lack focus because they are trying to do everything. For example, Decred isn’t trying do smart contracts, privacy, oracles, no fees, etc.

5) DEX-The Decentralized Exchange. I believe this is important because otherwise Exchanges have too much power, basically, in power to choose which projects get listed and which don’t (possibly affecting the success of some). The Decred DEX currently offers free trading withstanding a one time sign on fee, this fee is simply to prevent spammers. Pretty soon, you will be able to get into the Decred Wallet and access the DEX via your mobile wallet, how cool is that!

For me, the reason I’m such a fan of a DEX is because I’m tired of KYC requirements every time I want to buy a new coin on a new exchange. I do believe that there will still be a place for centralized exchanges in the future. For example, off ramping into your bank account/fiat.

6)SELF FUNDED-Yes, DCR has finally reached the point of being self-funded. This is super important because if it required outside funding, what happens when that funding dries up?

7)Has it’s own WALLET-A 3rd party wallet can be a security risk as well as conflict of interest risk. I like having an official wallet to go with my coin of choice.

8)UNDERVALUED price-wise. Comparing it to other projects standardized at a 21 million coin supply, you are paying less for 1/21 millionth of the supply. In other words, your money is getting you more of the TOTAL SUPPLY on a percentage basis.

I am not a financial or investment advisor, I am simply sharing my own positions and the reasons why I decided to buy them. Please do your own research.

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