Innovation vs. Inflation.
I won’t spend too much time discussing the latest CPI print of 8.6% and how the U.S. is potentially moving into a recession while the Fed is hiking rates along the way. You will read a lot about this outside of this email anyway.
Instead, I want to touch upon performance. When the market is in a dismal state, we tend to get feedback about our performance, and it’s expected. Nobody likes to lose money, and the market can get on anyone’s nerves. It’s especially hard on people who entered the market close to the top and haven’t seen much of that growth everybody was talking about.
Is that only applicable to crypto and SIMETRI, though? Take a look at Cathie Wood’s ARKK ETF flows. The majority of inflows happened closer to 2021. People bought the top.
ARKK fund flow. Source: VettaFi.
ARKK price. Source: Yahoo Finance.
Does it mean ARKK is bad and will never reach a new all-time high? I leave it for you to decide. The more important point here is that generally, the majority of newcomers come to invest in some asset or asset class closer to their top. They first ignore the space, then slowly get engaged and, when euphoria peaks, deploy funds.
I bought my first $BTC in autumn 2017, a few weeks before the top. I heard about $BTC as early as in 2012, so it took me five years to make the leap. For around two years since my first buy, I hardly saw anything but constant pain and suffering all around.
In 2018, we had an overheated ICO market, Chinese FUD, and Wall Street heavyweights promising to “tame” $BTC. In 2022, we have 40-year high inflation, disrupted supply chains, and fears of nuclear war. The decorations are different, but the script is the same.
Given the circumstances, no matter how good a project is and what innovation it brings to the table, it will most likely drown. It doesn’t mean that it won’t swim back up, though.
That’s why surviving on the market and feeding it in advance of the next top is essential for having a chance to succeed. The best time to buy ARKK was in 2018-2020, and some did just that. There weren’t many people like them, and others probably didn’t think that was a good idea. But then again, if everybody was excited, then it probably wouldn’t be a good time to buy.
SIMETRI Portfolio – The Crab Continues
$BTC is still largely in the $28,000-$32,000 range, and the Portfolio hasn’t changed much. If we see a higher than expected rate hike, that would most likely negatively affect risk-on assets, crypto included.
