Singaporean Talks Money: May 2022

Tuesday 10 May 2022

I got liquidated and lost my whole LUNA position | Anchor Borrow

My LUNA position

I do hold a substantial amount of LUNA in my portfolio in relative size to my portfolio value although it is about 4 digits amount which might seem small to some. LUNA is my 3rd largest holding after ETH and BTC. My borrowed value was about USD4000 and collateralized value was about USD6000 or USD5000 (based on rough memory, not exact as price flutuates) as LUNA has been dropping substantially recently. So my LTV is actually pretty safe I would say, I had a liquidation price of $43 and didn’t really think that LUNA would drop that low although there were some warning signs the day before.

Events leading to my liquidation

On 8 May 2022, there was a huge amount of UST withdrawn from Anchor Protocol as well as on Curve.

Massive withdrawals from Anchor Protocol past hour, frequency increasing

There's only $300MM left of exit liquidity left on pool 53 before BTC peg

Hope this isn't how it starts -- on a low liquidity weekend pic.twitter.com/BYrhSHtRkI
— Resonance (@resonancethis) May 7, 2022

This was in hindsight a warning but I decided to brush it away and just left my liquidation price at $43. I understand the basics of whole system and I have also explored the different ecosystems or protocols of Terra ecosystem. I find it a relatively easy to use and cheaper than the Ethereum chain. I do believe as more protocols are being set up to slowly take the UST reliance away from Anchor Protocol, Terra can become a really good entry point for crypto natives.

Crypto is a place where sentiments can change fast and people can lose trust in products once it de-pegs or loses them money. I have to admit that losing my bag of LUNA has been painful although I can recover it over the next few months. I wasn’t really expecting this but I guess the market has taught me a lesson, this is my only leveraged position and all my other crypto like BTC, ETH and smaller positions like SOL are all spot so I don’t feel anxious as prices drop, just continuing my DCA.

My UST position is a low 4 digit as I have been slowly deploying it to buy the dip although it has been dipping like no end. So on that part, the de-pegging is not as painful as losing my LUNA bag but I feel sad that the Terra ecosystem is facing such a hurdle at a time when things aren’t as good either where BTC which LFG bought as a reserve currency or as a backing is also not doing that well as BTC has also experienced a substantial drop.

Lessons Learnt

I think many lessons learned here for me.

Split your holdings up if possible

A few days back, I was actually planning to redeem all my LUNA out and to just stake it or earn yield on it, it would have protected some of my capital and not caused a full liquidation on my side. Over the past months, I have considered redeeming half and have half placed somewhere else to earn yields but eventually just decided to leave them in Anchor Borrow.

I think it would have been better if I had split my holdings up and at least be able to secure a portion and not have to lose my holdings.

Be agile and keep up to news (could be good or bad depending on how you react)

The crypto markets move and react fast to news. It might have already been a warning when there were huge withdrawals being seen on Anchor Protocol and Curve Finance. But for me, I usually choose to do nothing as of course, things could work the other way although no harm would have been done if I did redeem some of my holdings. Reacting too fast to news might not always be great but securing your positions and making sure you are “safe” is important too.

Don’t leverage your whole position and take profits when you can.

I leveraged my LUNA position when LUNA was in a great position and should have redeemed or sell some for profits. As I have mentioned before, I do have this difficulty of pressing the sell button as I always feel that it can go higher. I really do need to learn when to take profit especially so when the markets are at a euphoria.

What am I doing next?

Will I be accumulating more LUNA? For now, I will just DCA into ETH and BTC as I recover from the shock I experienced from being liquidated. I have to say that I enjoyed using the Terra ecosystem from NFTs to LP and to seeing so many new projects coming out eg self-repaying loans. Hoping that people who have also lost money recover and move forward. I think this has really humbled me and made me a few steps backwards towards my first $100,000 in investments. Wow, what a day it was, still early in the day but I feel like I just experienced a whole day in a morning! Not gonna make a video for this so if you want to help me slightly recoup my losses, you know what to do, I am kidding 😉 WAGMI!

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Sunday 8 May 2022

money no enough | inflation woes & is investing the way to beat inflation?

It’s been said so many times and I have definitely seen the inflation in my everyday purchases. So many articles have talked about inflation and of course, there are many things that have brought about inflation at such a rapid pace.

I think the recent events has also amplified the effects of inflation as supply chains delays reflected strongly through prices and shortage of workers have also made prices increase. There are a lot of downstream impacts and it all cascades down.

In this volatile time that we are in, it really is stressful if you do not have enough money to cope with the rising cost which doesn’t seem to be stabilising as we see the Russia and Ukraine conflict deepening coupled with lock downs in China and raw materials having price surge.

Everyone is affected just at varying degrees

Everyone is affected by inflation as prices across the board are increasing. I would say of course, the rich are also being affected as we see how the environment could also affect income due to the many restrictions.

Most recently, we saw Eason Chan talked about having very little to no income due to the pandemic and his saving has dropped to HK$30 million (S$5.2 million), leaving him "panicked" and stressed, as it can only last him at most for 2 years. Well, the reactions to that wasn’t that good as the amount was something that most people might not even be able to attain in their lifetime. But it was not sufficient for him to last beyond 2 years.

Of course, this doesn’t show how inflation affects him as it is the pandemic that has affected him. In Singapore, articles of inflation can be seen here, here and here. It is scary if previously you have been living paycheck to paycheck and with increased prices, it means you will not be able to get the same amount as you previously did. Even just adding a drink to a meal could be a concern as everything has increased and not just certain products. I would say we are all affected but at varying degrees depending on our lifestyle and commitments.

How to cope with it

There have been many opinions and articles released on how to cope with inflation, most of the articles are pretty funny as pointed out in Mr Brown’s and SideHustleRich’s tweets. I think generally the advice to cope with inflation is to drumroll “downgrade your lifestyle for cheaper options” and it’s really frustrating because you worked hard to earn the money but have to settle for less due to the increasing prices, I would say it is pretty depressing. Especially so for the younger generations who have maybe hobbies or interests that require some expenditure. I mean I cannot imagine cutting off money for a hobby that helps me release stress or helps me cope with what’s happening in the world.

Of course, another way is to increase your income or do side gigs to earn more. Yea, I think it really depends on the industry you are in and I know upskilling or going into more lucrative industries like tech can help but that really depends on the individual.

Is investing your money the way to beat inflation? Nope, there are other ways

I would say saving money is really not enough for our generation unless you are earning an annual income of 6 digits which I think a proportion of people are able to earn that. If you are not earning 6 digits per year besides saving, I think thinking about how to make your money work for you is equally important.

Investing comes with certain risks and your capital is not guaranteed unless you sign for endowment/savings plans which I am not sure if it does beat inflation in the long run as we are still unsure of how the future will be. If you find yourself not feeling safe about investing, put aside funds in safer investment vehicles + emergency funds and with the extra, you can try out investing. This is not financial advice and it is opinions on how I would allocate my funds if I were a low-risk investor.

There are definitely individuals who swear off investing then I think there are definitely other ways besides investing to beat inflation. You can monetise your hobby or any skills you have. This option is very much possible now due to the huge internet accessibility. You can also take up a side job like tutoring or doing grab to enhance your income. Lastly, you can also up-skill/re-skill and improve yourself to maximise your skills in your main job to enhance your main income.

Ending it off with this, I used to hear my mum talk about how bak chor mee was 50 cents and thought, “How is it possible that it was so cheap?” But in the future, I might be telling my kids how bak chor mee used to be $3 when one bowl would cost $10 and beyond. Scary to even think of it but it’s a possibility as we are already seeing noodles being sold at double digits in a hawker centre.

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Sunday 1 May 2022

Regrets not taking profits and how my investing thesis is going forward | Still continuing my DCA and if not, hold on for the ride

This has been in my draft for awhile so it might not really match the current context where the market has recovered and is on an upward trend or maybe not seems the market is so volatile. But I still want to release it as it was something that I learned from when the markets bottomed so let’s get into it. When the market hit bottom due to the war and then had a rather sustained low period, I was actually thinking why I did not take some profits previously, I know that an important aspect of investing is to know when to take profits.

I don’t have the habit of doing so as I am not sure where the profits can go to but in the face of such a volatile market and knowing that 2022 was going to be a volatile year due to the interest hike and parabolic markets in 2021, there were quite a few opinions about taking some profits first and getting in later.

How I felt when the markets bottomed

I guess we all expected 2022 to be a downward market as 2021 was a huge year for stocks and crypto with stimulus from the government and many working from home coupled with riding the investing wave + FOMO on reddit and twitter on profits from investing. But no one expected the war which is causing inflation to accelerate even more. For me, I wasn’t planning to reposition my portfolio as I was expecting the interest rate hikes which to me wasn’t until some time into 2022.

So when I saw the market nosedived in early 2022, I was pretty shocked mainly at the value of my portfolio haha, there was some disappointment seeing it drop so rapidly. But overall, holding most of the blue chips/L1 in crypto helped cushion the drop. My stocks on the other hand, having Tesla as the largest holding did fluctuate a lot. I saw many tweets on how most of them had restructure their portfolio to holding more cash or stablecoins to buy in when the markets dip further. I was also contemplating as I do have to admit that I am low on cash as well as not having a huge war chest. Having a portion of ammo on the side definitely helps.

Do you really need to take profits?

But if I were to reposition my portfolio and hold more cash/stablecoins, there will be another headache for me, which is, when is a good time to start going in again? I haven’t really done much lump sum investing as DCA has been the way I do my investing. DCA eliminates the thinking when to go in as I know I will constantly be buying again next month. With a lump sum, of course, you might not be able to get the absolute bottom but your entry point is also pretty important. I did sell off my SG stock holdings overall at a profit and moved them to stablecoins but they are a small proportion.

I have to admit that I was pretty bummed that I did not cash out some profits from my winners as I saw the stock market went lower but to be honest, my profits are not huge and it is quite segregated within different holdings. I will still continue to DCA into my current holdings for months to come. Maybe if I were to have profits in the 5 digits and 6 digits in each single counter would I consider taking profits to wait for the next “best” time to get in. But all in all, I think it is great and good practice to be taking profits and to roll it on to other better counters, there were numerous times when I wished I took profits (like when Tesla reached $1200 and when we had BTC at $60,000) but to be honest, a that moment, I thought it would go higher.

No best way but use the most comfortable strategies for yourself

For me personally, taking profit is not really a priority in mind and it is what makes and break my portfolio. I have held onto losers, learning to cut losses recently but have held onto my winners ever since the beginning. I think taking profit applies to different individuals, as I apply DCA to my buying, I find it hard to take profit as I contribute a small sum to build up my various positions. Next, most of the positions I initiate are for the long term and so taking profit don’t seem to be on my mind. However, seeing this market dip and volatility does make me question if I should be so fully invested as I am not able to take advantage of the dips.

But when I do see significant dips and I am unable to initiate a position as I am fully invested, it does seem like a pity to me although this can also be solved by building up a war chest. I guess with limited cashflow, this is what I will face. So definitely means an increase of income is the best way forward. I am also trying to not be so involved in looking at prices and thinking so much since I do also have limited funds, not like I am able to capitalise on every dip. I am doing this by moving my apps or portfolio trackers all the way to the last page on my phone (to remove that easy access).

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Pages

Tuesday 10 May 2022

I got liquidated and lost my whole LUNA position | Anchor Borrow

My LUNA position

Events leading to my liquidation

Lessons Learnt

What am I doing next?

Sunday 8 May 2022

money no enough | inflation woes & is investing the way to beat inflation?

Everyone is affected just at varying degrees

How to cope with it

Is investing your money the way to beat inflation? Nope, there are other ways

Sunday 1 May 2022

Regrets not taking profits and how my investing thesis is going forward | Still continuing my DCA and if not, hold on for the ride

How I felt when the markets bottomed

Do you really need to take profits?

No best way but use the most comfortable strategies for yourself