The Old Man’s Views Are you confusing hedging a position with diversifying your assets?


This post was originally published on Trademakers

Because I keep away from the micro part of the business, i.e., what to buy and sell, or what happened yesterday, it is sometimes difficult to find a spark of an idea when you try to put out something every week.

It would be easy to comment on this week’s collapse in cryptocurrencies and tell you it’s all China’s fault. But what is the point of me telling you what happened, after it happened?


I will not waste your time by repeating the views of every other commentator, in regard to what happened and why. Instead, I will discuss where I am and what I am doing.


From a trading point of view, I continue to look for diversity.

I will be putting some more Bitcoin in my account soon, as I look to buy on any dips over 15%

I am also exploring some deep out of the money June SP puts, to give myself a bit of time in case the impending stock-market drop happens later than expected. I am also holding more sterling than Euros or dollars. But I do have a pretty mixed basket of currencies.


That is is what I am trying to do. It is what suits me.

What you do is entirely up to you and should be focused on your circumstances.


In addition to the above, I am holding on to a small piece of agricultural land, albeit I recently got a decent offer on it.

Our income stream is also diverse, coming from holiday lettings, medical services, and various other, detached revenue streams.


Ideally, I’d like to diversify more, but there is a limitation in both my time and capital


I can be completely open about my activities because I am not selling or promoting any products from which I derive income.


I have been writing for some time now, publishing under the JPFS banner.

I’ve not promoted the company or their products, nor have they asked me to do so.

That is why I can write differently from most other commentators who write to promote the products their company is trying to sell.


I am sure, in the future, I will write about some of the developments at JPFS and some of their innovative products. So please keep an eye out for these reports. In the meantime, I will keep to being thought-provoking.


What is more thought-provoking than claiming the crypto world is now so centralized that it would probably be unrecognizable by the creators.


With centralized exchanges giving the financial transaction details of their users to the authorities, we are in a position where any snotty-nosed 20-something who works in a government office can make decisions about our lives.

Privacy? Security? Perhaps the business needs a new slogan.

Indeed, in the case of those living in less developed countries, giving governments such details could cost lives!


Then we have the position of grasping governments taxing these currencies as assets. What will this do for the future performance of Bitcoin?

Where I live, in Portugal, crypto is still considered a currency. But with the EU drawing up new rules and regulations, how long will this last?


Many people claim Bitcoin is the new Gold, and therefore it is an ideal hedge against rampant inflation or an economic collapse.

As I said earlier, I am buying on sizable pull-backs, in case the argument is correct.

But there is no precedent to support this ideal hedge argument as the strength of these new currencies is yet to be tested during a violent economic collapse.

I don’t want to piss on anyone’s Cornflakes, but if a massive decline is around the corner, and all indicators would suggest there is, then how comfortable will new investors be about owning something which only exists in binary form?


I have read the thousands of copy and paste explanations on Linked-In, and listened to the experts, who are heavily invested in the crypto sector, professing Bitcoin is more unsinkable than the Titanic. But are they basing their arguments on what Bitcoin was 10-years ago, are what bitcoin is today, which is arguably not the same?


We can all claim we know the answers, but do we?


I started this issue, pointing out how I have tried to diversify my financial situation ahead of a potential economic decline.

Rampant inflation is my main concern. But luckily, I do not have a mortgage, I don’t have to worry about that.


For younger readers, those who have prospered during a period of low inflation, interest rates are not just a number to write a report about. They can hurt.

I lived through a period when paying 10 or 12% interest on a mortgage was accepted. Every month we gave our banks a big chunk of our salary to pay our mortgage and interest, it was not great.


If I had more exposure, I would use Gold or Bonds, and I might, if I had one, change the balance of my stock portfolio towards holding more defensive utilities. The options are endless.


I will finish by making it completely clear, what I am discussing is what I am doing and what I would do if my circumstances were different.


Moreover, because I am an old man, these old school defensive actions are not uncomfortable.

Your circumstances will be very different to mine, and therefore you need to do what is comfortable for you. And that includes doing nothing if you are happy to go with the flow.


Until next time,
Good Luck and Good trading

The Old Man

The post

The Old Man’s Views

Are you confusing hedging a position with diversifying your assets?

appeared first on JP Fund Services.

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