124 lines
No EOL
7 KiB
Markdown
124 lines
No EOL
7 KiB
Markdown
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url: https://stacker.news/items/47539
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---
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# Operation Saylor Episode - 1/120
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Hi there, welcome to Operation Saylor series.
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I have decided to take a loan to invest in Bitcoin. I will make a series of monthly updates here to track the evolution
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of this operation I have dubbed Saylor (in honor of [Michael Saylor](https://twitter.com/saylor), whose bold bet on
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Bitcoin and willigness to promote it where strong inspirations for this adventure).
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My goal with sharing this experience is to allow everyone to learn whatever can be learnt from my plan and execution. I
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draw inspiration from [Jamespunk's great blog on his bitcoin DCA path](https://er-bybitcoin.com/)
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, which was and is a great example of how a real life, first person narration can be very instructive. I hope this
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series can fulfill a similar role for this different investment approach.
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As this is the first episode, I'll provide some context so that you understand better this and future updates.
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## The Operation
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On July 2022, I took a loan with my usual bank. This is an uncollateralized personal loan with a fixed amortization
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schedule. The main figures:
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- Principal: 33,000€
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- 120 installments in 120 months (10 years)
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- APR: 5.99%, APY: 6.16%
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- Each installment will be of 366.20€
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- Total interesed paid will be 10,944.33€
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- Early amortization penalty of 1%
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- No opening costs
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As this loan has no collateral, there is no margin call or liquidation of any sort. The loan is completely orthogonal
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to whatever the evolution of bitcoin's price is.
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During the first six months, my plan is to swap 5.000€/month into bitcoin. I do this instead of simply lump-suming
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everyting today to softly minimize the risk of picking a terrible entrypoint.
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After these six months, I will have a bitcoin stack of a certain amount and around 1.000€. From that point on, the plan
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is to:
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- Pay the installments each month.
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- Whenever the € stash goes very low, sell a bit of bitcoin back for € to pay for the next installment. Goal here is to
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keep as much value in bitcoin as possible and only go back to € tactically to cover the installments.
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- Repeat until 10 years have passed and the loan is paid backed.
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As time passes, two scenarios can take place:
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- In the SHTF (shit hits the fan) scenario, the bitcoin stack of Operation Saylor goes dry before the 10 years have
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passed and I am left with 0 btc and some outstanding debt with the bank. I will be forced to keep paying the
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installments from my personal pocket and Operation Saylor will have turned into a net negative for me. This could
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happen both in case a black swan completely destroys bitcoin and its value, or simply because bitcoin's market value
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doesn't go up fast enough to make a net return.
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- In the Moon scenario, I manage to pay all the installments by taking small bites of my bitcoin stack and I still have
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some amount of btc left in the end. If this is the case, I will have succesfully earned value with my bet, and I am
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left with a nice stack of some unknown value. This would happen in a scenario where bitcoin behaves the way it
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tipically has for the past 10 years (or with a slightly watered-down behaviour in terms of both return and
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volatility, but still trending upwards) and I get lucky with the volatility in the early months and years.
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My hope is that Moon scenario will happen, but I am very well aware that SHTF scenario is a serious possibility.
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## Are you crazy stupid? Never borrow money for investing
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I am aware that there is a not negligible probability of losing several thousands of euros with this operation. But,
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after carefully judging, I think there is also a significant chance of getting a great upside. After playing with
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different simulations and hypothesis, I decided that the expected outcome looked net positive and decided to pull the
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trigger.
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I am also taking a calculated risk. Given my personal finances and life circunstances, the SHTF scenario would be a
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nasty blow but not a death sentence. Even if I get hacked on day 1 and lose all the money, I still expect to have a
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plate on the table every day and a roof over my head.
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## Why make it a series
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There are several motivations to doing this.
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- Explaning and documenting my plans helps me reflect on them deeply. It's a bit like a peer review, with the only
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difference I am reviewing my own plans.
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- As discussed before, I find personal, real life stories of bitcoiners and their actions fascinating. Macro
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environment analysis, papers, technical and economics books,... They are all great reads. But I think sometimes we
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also need simple stories from regular people like us, with all the crisp of the real life and down to earth practical
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issues and details. Bitcoin is, after all, a grassroots, bottom-up phenomenon. It is the small actions of you, me and
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everyone else which compose the emergent behaviour of the network.
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- I think that, on most forums and communities, there is a dogmatic rejection to any kind of idea related to borrowing
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money for investing. I am the first one to agree that, for most people, most of the time, it is a terrible idea that
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should be avoided. But it is also my belief that under the right circumstances, it is a valid strategy. And so I am
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slightly pissed off because this automatic, parrot-like "NeVEr BorRoW tO INvEsT" comments hijack any kind of honest,
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open-minded debate around this option. I hope that these series can counterbalance this and get people discussing in
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a calm and thoughtful manner the possibility of doing something similar to what I am doing. If the angry mobs hijack
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my posts anyway, at least I hope that whoever is curious about the outcomes of taking this seemingly crazy and
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bonkers course of action can ignore the deniers and simply read my story.
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## Why not simply DCA with a part of your salary isntead
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I am. This operation happens on top of my already regular DCA schedule. So you could say I am doubling down.
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As time passes, comparing Operation Saylor to having DCA-d the amount equal to the paid installments will be an
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interesting analysis.
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## So should I do this as well
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The answer that most probably fits your circumstances is no.
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But, depending on your personal finances, risk aversion, other investments and what kind of loans and conditions you
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have access to, there is a chance that borrowing to invest might be a suitable option for you.
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I invite you to run your own analysis and put a lot of thinking into this decision. During the series, I will share my
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own train of thought and the numbers I ran before pulling the trigger.
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If you reached this far, thanks for reading. I'll be happy to discuss further in the comment section. You can find
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below the numbers that I will be posting regularly. I will also post some thoughts/ideas/whatever relevant comes to
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mind on each episode. But for this month I will close here. I already stole enough of your time and attention.
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---
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## Stats
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- BTC stack: 0.2083 BTC
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- € stack: 28,000 €
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- Current total value in €: 32,761 €
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- € into BTC: 5,000 €
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- Paid back to bank: 0 €
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- Outstanding debt: 43944.33€
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- Installments to go: 120 |