Hello all, here is a post that I was asked about by some recent commenters on one of my posts, and something I have really been thinking about when I start seeing talk of bull runs, blow off tops and massive gains in gaming and other areas.
The question is about how to build a portfolio for long term passive income?
And when I got started, I didn't know either. Luckily HIVE is structured in such a way that its easy to learn about good habits. Posts are either 100% power up or 50% liquid/50% power up, meaning you are always saving something into Hive Power.
And that by the way is my first tip -
Use 50%/50% payouts for posts
The goal is to grow your stake on HIVE over time, because I believe HIVE is an extremely valuable platform to have stake on, and its very useful to have HP and vote on content, delegate your HP for passive income, generate RCs and even generate account creation tokens.
The other 50% is just for you to play with, pay your bills or reinvest. The other 50% is for you to learn about crypto with.
Learn your lessons
When I started playing around with tokens, I lost some money. I would buy a token because an idea sounded good, but then maybe the token developer found something better to do. I felt urges to buy tokens when they were going up in price and sell them when they were going down in price.
If you lose some money hopefully you will learn the lesson.
Buy low, Sell high.
On HIVE, we have a great system for this, between HIVE token and HBD. When HIVE goes up in price, you can exchange it for HBD in the internal market. When HIVE goes down in price you can buy even more HIVE back from it with the HBD you have.
HBD is our very own stable coin!
When HBD is less than one dollar, you can do the 3.5 day conversion process to turn it into $1 dollar of HIVE as determined by the witness price feed.
When HBD is above $1.05, it can be profitable to put up HIVE as collateral to print more HBD and sell it for HIVE.
Buy low, sell high, is also a responsibility of a responsible crypto community. I read somewhere in one of @edicted's long posts that the next bear market is up to us, the people. The more of us risk off into stables during major pumps, and 'buy the dips', the more stable our prices will be.
This can be profitable as well over the long term, this isn't day trading its cycle trading.
Get to know the cycles
Get to know the crypto projects that you are interested in. In order to build long term you've got to do some research and figure out what are the technologies that are competitive long term. Feel free to have a bag here and there, but I have built long term on HIVE because I see the value of the technology, and it has been the most usable crypto for a long time with its social interfaces.
Its so important to learn about what you are doing, figuring out how to value projects is an important step in this, so you have have some metric of when to buy 'low' and sell 'high' - you have to come up with some numbers to compare it to to know if its low or high!
Use correct position sizing
Many people say 'don't invest more than you can afford to lose', and this is true, but from now on I am considering that you are putting 50% of your post payouts or profits from another project into this, so none of this should be things you cannot live without!
You must develop some certain distance from your portfolio as not to be tempted to cash out to rapidly and allow it to grow.
And for it to grow and not shrink, you cannot put too much in any one project. Even if you massively improve your ability to spot good projects, there are always risks. Based on the size of your portfolio, you should not be putting huge amounts in any one project, unless and until you really get to know it and believe in it.
Always take profits
It can be hard at first, because you really know and believe about the project, but take profits when your bets go up, 'milk them', and convert into more HIVE or HBD.
These strategies also work with bitcoin vs any other alts. Convert alt profits to bitcoin, and trade bitcoin against stables. I mostly stick to HIVE, HBD and Hive-Engine and other HIVE sub-projects like DLUX.
Know what you are accumulating
I stack in HIVE, some people stack satoshis, maybe people in the classic world like to see their dollar values going up so they stack in stable coins. Know what you are accumulating, and why.
If you think the dollar is going to hell, is it smart to accumulate in dollars? I believe in HIVE and over time I want to see that I am getting more of it, that's how I know if I am trading well or poorly.
Buy Low, Sell High
I will repeat this tip because of how important it is. Its the main tip really, make sure you are figuring out how to value projects to know if it is high or low.
On hive-engine, everything is priced in HIVE. I do not look at dollar value, I look at the hive price per token. When it is cheap relative to hive, I buy some. When it is expensive, I sell some. I do not go 'all-in' or 'all-out', I just sell a bit more each time it goes up, and buy a little more each time it goes down, assuming I have vetted it as a project I want to invest in.
To evaluate a project, you can take the hive price and multiply it by the total number of tokens. There are only ~330 million HIVE tokens, so use this accordingly to test the idea if any one project is undervalued or overvalued. A tribe with a market cap of 100k hive is a lot more believable than a tribe with a market cap of 100 million hive.
Play the long game
If you are chasing after quick wins to cash out fast back into fiat, its going to be tough. Its going to be tough to learn your lessons and develop good habits, its going to be tough to achieve compound growth.
When you stick with a project, you get to know it better, you will trade it better, you will learn the cycles and patterns. With both Splinterlands and dCity (but also HIVE), this example is a literal game. Getting to know the game, trading the game - you learn things. Buying low and selling high is part of the game!
Support the projects you get involved in.
So many people just come into a project discord and have an attitude like 'ok I bought some amount of your token, when will you make me rich?'. But that's not how decentralized projects usually go - the projects need you, your ideas, your enthusiasm, your feedback, your hype, your participation.
Talk to people, help new users, learn more things, make posts - participate. Your efforts can actually make the projects you are involved in more valuable.
Don't spread yourself too thin.
You cannot be everywhere at once, and you cannot keep up with wallet updates on 17 different wallet apps. Everyone has their limits, and maybe mine are particularly narrow, but I early on I went really wide on crypto with a number of small bets, opening up accounts on many exchanges. I've had exchanges go under like liqui, delisting of several projects on bittrex, and even when I self custody I've had tokens go missing due to wallet upgrades (KMD).
I still have some of those old bags, but I have had to liquidate from poloniex and lost my brain key for BTS - so not many.
I have had more success staying within a narrow band of crypto and getting to know it really well.
These are my tips!
Were any of them new or helpful to you? What lessons have you learned? Do you have a tip that you think I should have mentioned? Let me know in the comments below.