Year 14 And a Lesson in Maintaining Perspective

I am finally vertical, although the foot / ankle is still swollen and somewhat uncomfortable, and likely will be for several months, but at least I'm now somewhat mobile and working through the physical therapy 'step' of the process. 

It's been an interesting 12 months. Exactly one year ago today, my spreadsheet was showing a record drawdown due to the overreaction in the financial markets to the pandemic, but a year on and it is close to 64.6% higher, setting its most recent all-time new high on March 15th. 

Some of that increase was thanks to $TSLA which jumped 762% from an adjusted price of $86.86 to $662.16 but the markets in general have rebounded strongly from those March 2020 lows.

One annual birthday tradition these days is a meeting with a Financial Advisor who yesterday advised that I was too heavily weighted in $TSLA but with investment experts such as ARK, which "focuses solely on offering investment solutions to capture disruptive innovation in the public equity markets" now looking at a price of $3,000 by 2025, it's not a stock I am in a hurry to sell. 

Last year, ARK estimated that in 2024 Tesla’s share price would hit $7,000 per share, or $1,400 adjusted for its five for one stock split. Based on our updated research, we now estimate that it could approach $3,000 in 2025.

Some of you may be aware that Tesla CEO Elon Musk recently invested $1.5 billion of the company's money in Bitcoin ($BTC) which is a play I am happy to be involved with. My efforts to buy actual Bitcoin were abandoned as the process became far too complicated for a simpleton like myself who has trouble remembering the most basic of passwords, but I have invested in a Bitcoin Trust which is far simpler. The $TSLA angle is another way of being involved. 

Tesla’s investors, whether direct through the company shares or indirect through active or passive funds, have now effectively become holders of cryptocurrency Bitcoin, without actually buying it. This happened as Tesla’s famed CEO Elon Musk invested a staggering $1.5 billion of the company’s money into buying Bitcoin. Elon Musk also said that Tesla will accept Bitcoin as a form of payment soon.

This gives Tesla shareholders exposure to the popular cryptocurrency — some might welcome it, considering the meteoric surge in Bitcoin prices; yet, some others may not like the risk and volatility that come along. Notably, it’s not only the direct Tesla shareholders that now have Bitcoin exposure, but those with indirect and passive investments too, such as S&P 500 index, several Vanguard index funds, Fidelity group funds, and many more.

As for betting, the NHL System I mentioned in my last post has continued to perform well, although it did have two consecutive losing days last week which triggered an email from the reader I mentioned may have retired rich. He wrote that the...

NHL strategy we discussed before was doing OK until recently - do you think it is just variance or should I maybe move the threshold from...

I'm highlighting this because I think maintaining perspective, even after the smallest of setbacks, is incredibly difficult for many people. Stake appropriately with money you can afford to lose, and stay the course.

Some facts for consideration here are that for the NHL we have 15 seasons of data, including this current season, and this system has had one losing season which was back in 2007. It's pretty solid, but yes, on Wednesday and Thursday last week, four of the five selections lost. It happens. In fact, the system has lost money in 46 of the 116 months so a two day losing run is far from the worst that can be expected, but after 4,174 selections, an ROI of 6.7% is hard to dismiss and the idea that one of the primary qualifiers should be changed after a losing couple of days is irrational. While such simple systems shouldn't persist successfully indefinitely, one needs more evidence than this to make an accurate assessment. As we've seen from the NFL, the markets can stay inefficient for a very long time.

In fact it has a p-value of zero, but slow and steady systems like this aren't sexy and exciting, but require discipline and patience.

Just the one (losing) selection for the EPL Draw (Toss-Up) system with Arsenal v Tottenham Hotspur last week.

The ROI for the season drops to 67%, and all-time (since 2000) to 8%, but be wary of getting emotional about small samples, whether they're positive or negative.  

 

Incidentally, this post marks the start of year 14 for this blog, with the inaugural entry made back on March 21st, 2008.

2.3 million hits all time may sound like a lot, but if you break it down by day it's fewer than 500. But please keep reading. Now that I'm mobile again, I'll endeavour to post more frequently.