2021 Experiments: Q1 Update
I cannot believe we're already in April and there's only 257 days until Christmas!
I thought it would be a good time to do another experiment update considering the first quarter for the year is done. For any new readers, a quick overview.
At the end of 2020 I decided to plan a few personal finance experiments for the new year in order to explore some of the more "Questionable" areas of personal finance. Areas that a true and devout FIRE purist would not touch with a 10-foot pole. I'm a naturally curios hooman and I suffer from massive FOMO (That's Fear Of Missing Out if you're a Boomer or a Gen X like me), so whenever I hear of the next investing Gold Rush, it's easier to have a dabble and learn how the mechanics work than pile in all guns blazing and lose a fortune or sit on the sidelines watching stories of people making billions from selling stupid pictures that a child could draw.
Seriously, have you seen what is going on now with NFTs? WTAF dude! I've been down to the basement to dig out my Spirograph that I was given when I was five.
Anyway. I'm getting carried away. Here is a quick reminder of the Tribal Fi 2021 Experiments:
So here's the update
Crypto Trading Bots - 8/10
This is actually a good place to start. Spoiler alert; we have at least one howler in this pack.
However, on the Tribal Fi rating scale of 1-10 (Where 1 is don't touch it and 10 is this could get a large portion of my personal wealth), Crypto Bots are a solid 8 at the end of the first quarter.
Why? Because with a bit of trial and error and a LOT of reading, playing around with settings and generally just a lot of staring at a screen for hour after hour the last 3 months, I've got these babies figured out and the risk is waaaay lower than it should be for the level of return. That is as long as you believe Cryptocurrency isn't going to permanently die. A crash would be fine but clearly if it just faded and died, you'd lose everything you invested. I personally don't think that's going to happen so let's get into the results so far.
Since January I started really small as I was learning, then in February I plucked up the courage to throw a little cash at it and ended up with a total of R49,517 / $3,301 / £2,475 invested in Cryptocurrency.
As I write this, the value of that investment has grown to R110,235 / $7,349 / £5,511
For simplicity, we'll use the first of January as the start date (it was a bit later than that) so we've been invested for 101 days. The total return has been a massive 122.6% which is 1.2% per day. If it flat lines at that performance, by the end of 2021, we'll see an unbelievable 443% return for the year which will turn the R49,517 / $3,301 / £2,475 investment into R268,877 / $17,925 / £13,443.
Now that would be simply unbelievable, and the temptation to throw a $100,000 at this is growing but I'm not going to do that as I'm still convinced I'm missing something. If by 6 months, returns are even half what we've achieved so far, we will be going large on this one.
For anyone who is particularly interested, at the time of writing, I have around a 50/50 mix of DCA Bots and Grid Bots with the former being medium to high risk with high returns and the latter being lower risk with medium returns.
This one was a lot less racey and a lot more traditional. Put simply, the test here was "Can you pick a winning stock listed on the JSE (Johannesburg Stock Exchange) using free internet research?" I used a site called Simply Wall St to do my research which was pretty simple (It's slightly more involved but I basically picked the stock they said was most rounded and in a strong position for growth). That research pushed out Impala Platinum Holdings Ltd as the horse from my 2021 investing race.
To make things a little more interesting, I called out to my readers to participate with their picks and all they had to do was give me an honest reason why they picked them. That ranged from a finger in the air, to millionaire tipster to a baby being born (honestly) as well as the slightly more obvious pandemic recovery plays. I made a virtual investment of R10,000 / $666 / $500 on everyone's behalf and made an actual investment on my bet (Well, if you're going to do the work, you might as well get the rewards!)
I've pulled today's league table and published it in the table below including the reasons for investing:
So a quick bit of analysis tells me that this experiment is looking very likely to have the outcome of...YES. If the results so far are to be believed, it is indeed still possible to make a decent pick using free internet research tools. Even for South Africa, which is woefully under represented as a global financial hub.
It is also indicating that you should never listen to a "Hot Tip" ( Dragon Oil, I got sucked up in that one back in the late 90's, what a dog of a share!). It also indicates that the COVID recovery has still not really started and that there's still nothing much wrong with a good old fashioned blind pick.
Did I mention I'm winning?
Thematic ETFs - 4/10
This one started so well.
And now? Well if it was your horse, you would shoot it to put it out of its misery!
The basic premise of this experiment was that proper FIREites limit their investing largely to low fee passive index funds. It's tried, tested and it works. But it is soooooo boring! It is literally like the story of the tortoise and the hare. You know the tortoise is going to win but the hare just looks so much cooler.
And Thematic ETFs are the hare. They are actively managed ETFs that follow indexes based on a theme e.g. Innovation, Health or even Space Exploration.
I jumped in with both feet on this one after my Financial Adviser introduced me to Ark Invest. Ark is headed up by one of the gods of thematic investing, Cathie Wood. So what did I do? I threw R75,000 / $5,000 / $3,750 across all of Cathie's ETFs which cover the following themes:
Ark Next Generation Internet- Read: 5G
Ark Autonomous Technology & Robotics - Read: Tesla Self Driving Taxis
Ark Genomic Revolution - Read: Any book about Cyborgs
Ark Fintech Innovation - Read: The new Paypal-a-like
Ark Space Exploration & Innovation - Read: The Martian
Ark Israel - Read: Some of the coolest tech comes out of Israel these days, who knew?
Ark Innovation - Read: All of the above rolled into one ETF making it theoretically lower risk (this would be the one to buy if you want to test the water of thematics)
Now everything started out great and within a matter of weeks we were up over 10% but it was short lived and it became clear pretty quickly I had bought right at the top of the market. Through March, tech stocks took a beating and Ark was not spared. Right now I'm around 10% down and at one point it was close to 30% so not for the faint hearted.
My thoughts right now is that it's still a good investment over the long term and if I'd bought a few months earlier, I'd be happy, so I think we'll have to wait until later in the year on this one. I did however "Buy The Dip" and bought R300,000 / £20,000 / £15,000 of the Ark Innovation ETF whilst it was down in the doldrums so my Magnificent 7 ETFs, became the Magic 8 (ball) ETFs last month. An update on them, another time.
Cryptocurrency Mining - 8/10
So last, and almost certainly least is crypto mining. I recently acquired a broken gaming PC and decided to fix it. Once I'd done that, I realised I don't play video games (are they still called that or did I just make myself look old?) and the last thing the house of H needs is another computer. So I had read that crypto mining had become popular again so decided to give it a whirl. How hard could it be right?
Well it turns out it's easier than falling off a log. I just installed a little piece of software called Nicehash on the PC and turned it on, Bob's your uncle, Fanny's your aunt.
It's been a couple of months now and the machine has been running 24 hours per day and consumes around 200W an hour. So a quick bit of math tells me the electricity cost would have been around R300 / $20 / £15 for that period. I say would because we're solar powered so the cost is a big fat zero.
The returns over the same period have been right around R1,500 / $100 / £75.
Now it's not going to change my life but the way I see it is the PC cost me around R2,500 / $166 / £125. So in another 6 weeks, the PC will be paid for. The machine is sitting in the basement hurting nobody and apart from a quick check in to see how much it's making every few days, it's basically a small but almost zero maintenance money machine.
R700 / $46 / £35 a month is nothing to write home about but that is the same cost as all our bank charges, Netflix, Amazon Prime and Youtube premium so I'm good with that. It's actually 1% of our total monthly spending so only 99 more ideas like this one and it's time for a beer!
Experiment Summary - Quarter 1
Overall, I'm pretty please with my experiments at the end of the first quarter. I've earned some money and learned a lot in the last 12 weeks so that's great. My prediction is the Thematic ETFs will come right and I'll find a flaw in my crypto bots (But if I don't, watch this space). The mining will keep plodding along and the stock pick is still too early to call. Most importantly it's been good geeky fun and occupies me through these long lockdown days.
As always, don't take any of this as advice, I'm way too dumb for that, I promise. This is still closer to gambling than investing so if you do decide to copy anything I've done here, good luck, but if it goes pear shaped, don't come a knocking!
Until next time, keep living