Welcome to Positive Skew. Here's Why You Should Subscribe

Welcome to Positive Skew, a newsletter/blog about investing in crypto without getting rekt.

Why should you subscribe?

Because crypto is the most asymmetric investing opportunity available for retail investors today.

I can help you learn to find the coins with 10x upside without losing your shirt along the way.

Hear me out:

Fear and Greed and 8% on Average

We're taught to buy and hold. It's beaten into our brains. It’s good advice.

It’s a mantra. It anchors you. It keeps you safe. Markets dump and if you panic, you sell, low. And then you buy back in, high. Not good.

You have to grind thru market downturns. Grin and bear it.

Mr. Market promises 8% annual returns if you just buy the S&P 500 and …. wait. The slow grind to $millions$.

But then the market dumps 19% in 2022. And it nukes 38% in 2008. But then it rockets 29% in 2019.

This isn’t what 8% feels like. This is fear and greed territory. Did you wait, as prescribed? Or did you trade?

It’s 8%. On average. And it works.

You may not vacation in Europe every summer. But you should be able to retire eventually. That’s something to be thankful for.

Volatility. You've got to ride the wave. 

Risk → Returns. It's the way it is.

8% isn’t really 8%. It’s +20, -10, +15, -20. It’s up and its down, but mostly up.

Want more than 8%? You’ve got to up the risk. There’s no other way. No shortcut.

Actually, there is 1 shortcut. Only 1. You can diversify. Add some bonds. Add some real estate. Add some gold. You may see a little lower absolute returns, but in exchange you get a smoother ride up and to the right. 📈 

The classic recommendation is 60/40 stocks and bonds. You buy 60% stocks and 40% bonds. Not because bonds outperform. They don't. 

They stabilize. They're less correlated. They lower your volatility. They smooth the ride.

And over the long term, number go up. 8%. On average. Maybe a little more. Take the smart path, the risk adjusted approach. Sleep well at night.

Diversification is the only free lunch in finance. 

Now you’re on track. Maxing out that 401k every year.

And then you hear about some guy making $50 million from Gamestop. And then Elon tweets about dogecoin. 🚀

Or the worst of all, you see the price of a NFT monkey jpeg. 🤮

It feels like a casino. And casinos don’t have a table for 60/40 stocks and bonds. Not on the moon anyway.

60/40 with a touch of 100x

Crypto though. Crypto’s got it all. Volatility. Immature and inefficient markets. A new technology. It’s polarizing. This is an edge.

Crypto is the casino with the best odds you’re ever going to get.

Over the long term, 60/40 really is the right move. Don’t get me wrong.

I’m DEEP into crypto and as I type this less than 7% of my net worth is in digital assets. I like a little risk, and I generally go with something more like 70/30 (or maybe I should say 70/23/7).

You don't want to puke your 401k at age 65. Lose 50% at the end of the game. Not worth it AT ALL. I worked with guys who lost their retirement in the Great Financial Crisis. It was terrifying.

It’s not worth it at 30 either for that matter. The first rule is don't lose money.

But taking a swing on crypto doesn’t mean risking your nest egg. Engaging with crypto isn’t the same thing as nuking your retirement. You can take risks that make sense.

Crypto (and investing) is not all or nothing. You can play in a responsible way and see some of that 100x upside too.

You can use the same techniques that minimize risk and maximize returns in your 401k to make great returns with crypto. It’s 60/40 with a dash of 100x.

Recognize crypto markets for what they are. 

The crypto casino has a lot of risk, but it’s a risk where the math can be on your side.

You can’t let your emotions get away from you. You can’t panic. And even more dangerous, you can’t be greedy. You can't bet the farm. 

A little bit of crypto goes a long way. Because a little bit of crypto has a lotta bit of volatility. 

You don’t really grok it until your first shit coin rockets 10x in a month. Then you do. Then it happens again. Then you really get it.

You diversify to make your 401k safer.

You can also diversify to make it outperform.

A little bit of crypto goes a long way

I have an example of this I share with new subscribers. I walk through the numbers step by step.

We take a basket of ETFs and design a portfolio not based on 60/40 or Ray Dalio’s All Weather or some snake oil allocation shilled on CNBC.

We use cold hard numbers and allocate based on..wait for it...volatility. It's risk adjusted.

And you'll see that just a little bit of crypto can move the needle. A lot of upside potential, appropriately sized beside your 60/40. You don’t have to bet the farm.

And then, if you take this concept just a little bit further, I hope that you'll see that crypto isn't that scary. 

It's actually a great opportunity to make money.

The Price Drives the Narrative

Investing in crypto is not like the lottery. It's not swinging for the fences to make a billion in that coin you saw on TikTok. It's not diamond hands and deep out of the money calls.

If you talk to a crypto VC, they’ll tell you that crypto is all about narratives. Crypto VCs are also, by and large, lemmings.

They would say that prices move based on what everyone is excited about at that moment. DeFi Summer. NFTs. Web3 Gaming. Layer 2 Szn. Solana Memecoins. Every 3 months there’s something new to chase. They'd say that the narrative drives the price.

I don’t think the data supports that narrative.

I think reality is the other way around. It's the price that drives the narrative.

Put another way, crypto is all about momentum.

It means you can see what’s happening in the flows on-chain (transparently, immutably, permissionlessly). You can watch the lemmings chase each other in circles. You can see the momentum before you hear the narrative.

It’s something we can measure and put into a spreadsheet and manage. It’s something with a probability.

Everything you need in 1 email a week

That’s why I think this is an asset class worth paying attention to.

My goal is to help you learn about investing in crypto the right way. 

I want to share what I've learned about investing, building products, and managing risk in this industry and in these markets. 

There’s opportunity for all kinds of investment strategies – value, momentum, thematic, growth, venture – but you have to remember that digital assets are not stocks. They’re not bonds. They’re not exactly commodities either. They have their own peculiarities. 

That’s where I can help and that’s what I want this newsletter to be about. The disciplined, risk appropriate way to successfully engage with crypto assets. 

That's why it’s called Positive Skew. This newsletter is about sharing how I build my portfolio with 100x upside, but without over exposing myself for when the volatility turns against us. It means small losers and very big winners. 

It's about investing farther out on the risk curve, where more risk creates more return. 

But doing it in a way that doesn't leave you rekt and broke. 

Or worst of all, owning a bored ape NFT.

It starts with bitcoin and ether and the basics of volatility targeting. But over time I go much deeper, analyzing altcoins across all the major chains. Giving you an easy place to see where the money is flowing, where the crypto natives are experimenting with interesting ideas, and where to avoid the charlatans and the scams and the traps. 

I've been in or around crypto since 2017. I did risk management and equities research before that. I've built crypto products at large industry leaders and at seed stage startups. I've made great money. And I've lost money too (RIP Ohmies).

This newsletter is about being eyes wide open. Some of crypto is crazy legit. But other parts are scams - plain and simple.

At the end of the day, I really like going deep into investments. I like the spreadsheets and the finance. I like figuring it out and watching the numbers move. 

And I like the crypto.

That's why I decided to give this newsletter a shot. It's an opportunity for me to share this passion with you. 

So that's my pitch. Subscribe and I'll teach you what I've learned. I’m not going to give financial advice (you own your decisions, no one else) and I’m not going to try to convince you to do anything with your money.

But I am going to open my portfolio to you with all the analysis, reasoning, spreadsheets, and gains and losses with it. 

If any of this sounds appealing to you, or if you just want to make me feel happy to see your name ping on the new subscriber list, I’d love for you to subscribe. 

As a welcome bonus I will share a pretty cool spreadsheet that explains how volatility targeting works (I mentioned this above) when you subscribe. I think it will be eye opening for you even if you have no desire to learn a thing about crypto. I even recorded a video of myself explaining how it works. :)