As I talked about a few months ago, last year (2017) was the first year in which I actively managed speculative investments, as opposed to having 100% of my net worth in stable, safe, boring investments. I only speculated with a small percentage of my overall net worth, since that way, if I lost money, I’d be upset, but I’d still be okay.
It’s important to understand the difference between speculating and investing for this conversation, and if you don’t, please read this before continuing. 2017 was the first year in which I actively managed my investments and speculated, in addition to having my normal “boring” investments.
Normally, I’m accustomed to 5% returns, 8% returns, 4% returns, things like that. Last September, I reported that that my overall portfolio, the boring part and the speculative part, were up 37% in the last 12 months.
How did I do overall for the entire year of 2017? Was it more than 37%?
Yes, way more. Because of bitcoin’s skyrocket at the end of the year, ethereum’s skyrocket at the end of the year, the bitcoin cash fork in August, and something else skyrocketing that I won’t mention, my portfolio growth for 2017 was… 122%. Yeah. The interest on the portfolio alone more than doubled the entire value of the portfolio.
I realize that many people won’t believe that number, but I promise you, that’s the number. I triple-checked it in my primary investments spreadsheet. I have a hard time believing it myself. And before you ask, no, that’s not including the new cash I added the portfolio this year. If it sounds hard to believe, let me clarify a few things:
- When I say “my portfolio,” I’m not talking about my entire net worth. I have cash reserves, savings accounts, gold, real estate, and the value of my businesses that I do not consider part of my investment portfolio. So I’m not saying my total net worth went up by 122%. I’m just saying that of a segment of my investments I consider my long-term investment portfolio. Most of my cash and gold I consider mid-term savings or emergency savings, and real estate I keep separate.
- That being said, a significant portion of what is in my portfolio is cash. Not most, but a lot. And yes, even with that cash sitting at zero percent growth, the total return on the portfolio still went up 122%.
- As usual, for security and legal reasons, I can’t and won’t tell you exactly where my money is invested in, but to give you an idea of what happened, my bitcoin went up in value over 330%, my ethereum 150%, my bitcoin cash infinite percent (I’ll explain that in a minute), something else went up 34%, and something else went up 19%. My cash (obviously) stayed the same, my gold stayed the same, I lost -3% on my silver, lost -7% on something else, and just about everything else about broke even for the year.
- Bitcoin cash, for those of you who don’t know, is not bitcoin. In August, bitcoin went through a “fork,” where everyone who owned bitcoin instantly received an equal amount of bitcoins in bitcoin cash, which is a new type of bitcoin. Initially, when this happened, bitcoin cash wasn’t worth very much. However, by the time my bitcoin cash vested and I took possession of it in mid-December, it was worth around $3000 per bitcoin. I quite literally woke up one morning with thousands upon thousands of dollars in my new bitcoin cash wallet. I seriously thought it was some kind of mistake before I realized what was going on. The return on this “investment” was infinite, since I invested zero dollars to make this money; it simply cloned my bitcoins. Very nice.
- I’ve already pulled out my initial investment for both bitcoin and ethereum once they both doubled, plus a healthy profit. This means that if bitcoin and/or ethereum (or both) go to zero tomorrow, I will have still made money, and any new returns as of late last year are effectively infinite (since again, I invested none of my own money to make these returns).
Just like I said in September, I’m under no delusions about these high returns. I realize this was an odd year, and I don’t expect to make returns on this in 2018, and I don’t think I’m some kind of investing genius. I’m just a guy who did a lot of research and had a few of my speculations turn out correctly. Perhaps in 2018 I may lose a bunch of money, or do okay but no where near 122%. I guess we’ll see.
As I’ve also said before, If I’m able to make really good returns three years in a row, I will consider myself “onto something” instead of just being a lucky guy in the right place at the right time, and I will write a book about what I did. At the moment, one year is not a track record, although I have still never lost money in my portfolio. However, that trend can’t continue forever now that I’m speculating.
Lastly, will repeat that I’m only speculating with a small percentage of my overall net worth, which is what I recommend you do, if you want to speculate at all. Only speculate with money you can afford to lose, that won’t negatively affect your long-term financial goals. The vast majority of my net worth is in very normal, boring stuff, and will remain so, regardless of how exciting things like bitcoin or whatever get.