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A speculative education [Members]
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I love this @finumus – great post! The Gladiator tweet still makes me laugh. I’ve learnt to just enjoy this kind of action vicariously as I have no stomach for when it goes sideways! Please do keep writing these 🙂
Excellent piece as always 🙂 Thanks @Finumus.
I’ve been fishing in somewhat similar waters – see “Weekend reading: Bitcoin is a bubble. Probably”, 2nd December 2017, at comments #58 to #86; and “Chose Your Fighter”, Moguls, 4th April 2024, at comments #16 to #22.
It’s got to be adjusted Kelly criterion for this rollercoaster stuff – and adjusted right down. Otherwise it’s pure kryptonite (although, come to think of it, that’s also the name of a UK crypto based share, but that’s another story again 😉 )
For me that means, with MSTR and LMI3 (and 3MST too now), DCA / drip feed monthly via ISA with the total sum eventually committed hard capped at 1% of the ISA starting amount using a rules based approach, e.g.:
– LETF between 80% down and 400% up month on month =1x target DCA amount
– LETF down >80% = 2x target DCA amount
– LETF up >400% = sell
With the LMI3 and MST3 LETFs carrying a shocking 20 to 30 times the volatility of the S&P 500 the only sane thing is to either steer clear altogether or to try to make a virtue of the volatility drag effects whether the underlying (MSTR/BTC) is in a chopsolidation phase or an outright down mode. Drip feed in on the crashes and just bail out beyond a certain point on the rallies. Set a hard and fast absolute cap on what goes in eventually (i.e. in total) and then make sure that the cap is low enough such that the pain of a total loss is de minimis. For me that’s 1% of ISA (i.e. if it all incinerates then I still have 99% of what I would have had had I not taken the punt at all).
Thanks, Finumus. I really enjoyed this. I know very few people (possibly none) who I can discuss the ups and downs of investing. Monevator is where I come to know I’m not alone and its a real pleasure to hear an honest and humorous account. My youth was more marbles and top trumps then moving onto smoking and snogging than financial research. I bought my first shares in the late 90s when I was 20ish and have had a lot of very bad clangers but also enough big wins to keep me excited. I probably would have done about as well by going all in with a world tracker from day one then taking up watercolor painting. But I enjoy the ups and downs and only speculate with an amount I don’t need. Easy come easy go.
Thanks again!
Ive followed bitcoin for 10 years and bought in and out. Mostly i dont like it and cant see what good it can do. I currently own mstr despite my bemused distrust of saylor. Its in some ways been my only win-win bet. I’m pleased when it goes either up or down.
I, for one, am certainly entertained. Finumus continues his unbroken run of never posting anything less than excellent.
Do you now short $MSTR? Being 3x long on the way up then short on the way down would be rather heroic. Citron seem to have a point on the whole listed BTC vehicle with a $100bn market cap and $30bn of BTC
I think if you cut Finumus in two you would see ‘mogul’ printed down the middle? Entertaining as always – keep up the good work! If only I were brave enough for these sort of japes.
Bitcoin is fully crazy, it makes no sense on any level, but that’s no barrier here 😉
@all — Just a note to say Finumus has read and appreciates the comments. I’m not sure why he hasn’t popped back on to enjoy a bit of well-deserved acclaim!
Maybe he’s too busy trading Solana derivatives on leverage with Taiwanese students via 4Chan or something. 😉
Really enjoyed this, living vicariously through Finumus because of my own PAD rules.
A meme perspective on MSTR:
https://open.substack.com/pub/shrubbery/p/microstrategy-and-mega-nonsense
Volatility arbitrage and MSTR as a Lehman’s lesson:
https://open.substack.com/pub/campbellramble/p/convert-of-doom