Personal sharing: The way to crypto investment

The investment experience in the cryptocurrency market that I wrote for my internal team was actually an attempt to conduct a three-year experiment on how to use the simplest method to look at trends, people, and assets. Today, I could manage a $10 million cryptocurrency fund, and by the end of this year, I could manage a $100 million fund. In the next three years, maybe I could manage a $1 billion fund.

There were originally ten items, but I couldn't stop writing. I wrote them on Thursday while attending a meeting. This is the first draft, and I may continue to write later. If you don't like it, please don't criticize me.

1/ Become a primary semi-market fund

Investing in the cryptocurrency market is completely different from the angel, VC and PE that we have encountered in the traditional Internet in the past. This most active emerging market is an economy based on secondary market investment and primary market investment to empower brands.

There is a very important logic behind this. We can participate in the primary market, do in-depth research, understand the first-hand information of the project, and then exert our power earlier in the secondary market.

Instead of waiting for the primary market, which requires two to four years of locked-up returns, native, decentralized, and even multi-channel liquidity is the unique charm of the crypto market. So, what we have to do is actually the primary and semi-investment market.

2/ Stand with the most active entrepreneurs

Try to stand with the best projects. Have the ability to have a smooth connection with the best entrepreneurs. Know what they think, because they provide us with the first-line market signals and understand the market reference system and reference objects. Only by doing so can we search and judge the basis and determine where the next better project is. Learning from entrepreneurs is the most valuable part. Emotionally, you have entered a space of development with entrepreneurs and have some resonance, which is definitely not a bad thing.

3/ Get your principal back quickly

For initial investment projects, it is very cheap to enter early, and the return may be three times, five times or even higher. For example, if you earn from staking, even if the cost is not high, you must quickly get back the principal, do not be greedy, and develop a habit. Especially for projects that have just entered the market, most of them are not listed on larger exchanges, and liquidity is seriously insufficient. Once the overall market sentiment has problems, it is difficult to get back the principal and will be locked up for a long time.

If we have enough capital to start with, we will have the opportunity to buy at the bottom next time and find new targets in the next step.

4/ Long-term holding of top projects

The focus of the asset portfolio is that 75-80% must be the current top, especially the absolute top of emerging sectors, such as underlying protocols and trading platforms. Big investments never look at news, but at real trends. Once we adjust our positions, it is also a replacement of the old top and a supplement to the new top.

5/ Investing is lateral thinking

When starting a business and doing a project, you need to think vertically, digging deeper and deeper. Investors usually use horizontal thinking, which is to design combinations in horizontal targets. Once you find the head of a market segment, you need to look for the next new market and new head. Take the initiative to find new targets and discover new themes, and don't be obsessed with one sector. Some people invest in a protocol of a sector and think they know it very well and are very professional. They keep buying targets under this protocol, one after another, but it is actually unnecessary. Just get the head.

In the past, we often heard that investors should invest in markets they understand. In fact, no one is born with understanding. Often, the so-called understanding you see is because you really understand it after investing. Even many investors are scared to death when they enter the project, because it is not what they initially thought. In the cryptocurrency industry, changes are faster. Investors in this field compete with the momentum of continuous learning, the courage to see opportunities, and the ability to correct mistakes in time.

6/ Focus on decision making, not management

This is the essence. When you start investing, you can focus on "doing research and making decisions". Investment requires pulling the trigger, and the last critical step is a direct response to information collection. Investing is not management. I have seen some institutions that are not actually very large. I think there are many talents under them and they just need to be managed well. It would be bad if there are so many talents and the meetings are full of gossip. In fact, as more people come in, there may be good information, but there will be more terrible noise after the symphony of different modes. When there are too many people, the rhythm is not right, and there is no need to write a PPT. If you are so moved by the target you want to invest in that you want to hug it and kiss it, why would you rely on PPT polishing? Don't make investment decisions complicated.

Investment in the crypto industry often cannot be delayed. Once the market senses it, you must act immediately. Otherwise, if you wait until the price goes up, you will lose your courage to make decisions, and then you may become angry and even lose control of your mentality, making mistakes again and again.

7/ It’s best to work in pairs

This is the same as how we organize entrepreneurial teams. A two-person team is an ideal structure. We can look at the combination of professions and abilities. The two people complement each other in their professions. One has product and technology, and the other has economics or finance, or even sociology and psychology. From the perspective of ability or personality, some are good at organizing resources, and some are good at influencing. The above are all golden combinations in terms of professional ability.

If an investment team consists of two or more people who do not understand technology, do not write on Twitter, and cannot even be found on social media, it will be difficult for them to survive in this mixed industry. No industry is without its share of mixed people.

So, what are the advantages of both of you?

8/ You will be too superstitious about your expertise

When investing, be careful not to fall into the endless K-line thinking. Once you get addicted, you will end up with short-term long and short thinking, just like a product development team that is simply trapped in endless pure coding thinking. They are busy in the code, look professional and hard-working, but have almost no time to meet clients, and often end up wasting their efforts.

There is a type of person who likes a tool or method very much, and has reached the stage of being proficient at it. In fact, people who rely too much on technical paths, once they begin to ignore the outside world, often look down on differences. Once they find that the changes cannot be analyzed within the scope of their old tools, they say it is metaphysical. Such people, living in a well with exquisite decoration, may not be suitable for investment.

In fact, whether it is investment or product development, there is one thing in common: to assess the situation, one must not be overconfident in one's expertise. One must first step out and look at the picture from outside.

9/Why is it difficult to place a bet?

A good target is often known by few people and not many people hold the coins. Once many people hold it and it has a great reputation, it means that the project has missed the best stage for investment. Therefore, investment is also about the feeling of going against the flow and the courage to bet. Invest when no one cares. Last year, I asked a colleague to look at a new Bitcoin asset protocol token. When he saw that there were less than 1,000 wallet addresses, he said that the market was too early and there was no hope. He turned around and started to watch the Bitcoin K-line. In fact, we entered the cryptocurrency market because we were attracted by the story that could have at least 100 times the return.

There is a saying that you can take as a joke. Over the years, I have observed that people who feel pleasure when spending money are suitable for investment.

10/ Entrepreneurial Gene

If there is a strong entrepreneurial background in the investment team, it is a plus. A good entrepreneur, regardless of success or failure, always maintains one most important quality, which is hunger. Facts have proved that this has nothing to do with a person's age. Steve Jobs was able to say "Stay hungry, Stay foolish", which shows that he saw through human nature. On the contrary, a person with a background in a large company who seems to be in a good position may lose points.

Over the past decade, I have seen many entrepreneurs who were not very successful or even failed come out to invest, and many of them have made a comeback. I have also seen some very successful professional managers come out to invest, but they care about appearances and do not work at all. Why? They have long been satisfied with their career achievements. These executives of large companies will not change the bad habits they accumulated in large companies, and just use the money given by LPs as a facade for early retirement.

11. Manage your expectations

Investment is ultimately about returns, so you should exit when it is time to exit. When exiting, don’t worry about how good the next person is, or how big the momentum will be after more investors join. It is true that you should sell when the market is booming. When is the boiling point? You only need to worry about one thing, manage your expectations, how many times your book returns have been, and whether they have reached your initial expectations?

A person's basic goal is to improve his ability, including professionalism, cognition, energy and charm, which can be improved through practice. Birth is destiny, no matter noble or humble. Making a fortune depends on luck. Being able to make money step by step is considered a skill. The question is, how much money do you plan to make?

Be pragmatic and live longer. As long as you are alive, you will have the opportunity to fantasize.

As I write, I become more vulgar. When I first entered the crypto market, five years ago, I said that I would write "My View on Crypto Assets" to make a summary. I couldn't stop thinking about it, but I didn't know where to start. Five years later, although I was at a loss, I actually learned a lot. In the past five years, I just made up for the general knowledge of the market, economy and finance. The only lucky thing is that I am very hungry.

Update/The following four correct opinions can be listened to in reverse.

Some of these conclusions are being broken year by year. What innovators need is to be sure of their own cognition and be willing to accept defeat.

1/ NFT is out of the question! ——Token is more direct. A small picture is a non-fungible asset. How is that possible?

2/ Bitcoin is good enough! ——Programmable expansion? Ethereum already has it, so don’t reinvent the wheel.

3/ There is absolutely no chance for blockchain games! ——If I want to play games, why not go to consoles and online games?

4/ Earlier, I heard a senior with rich experience in the cryptocurrency circle tell me that DeFi is a gust of wind in the capital market. Don't touch it.