Guests of this issue: Raymond, Partner of Mossfire Capital

FC: Why did we invite Raymond today? We actually wrote three keywords on Twitter: the first is a regular army, with 8 years of experience in investment banking, and stayed in traditional finance for a long time; the second has handled apps with millions of DAU, which I think is quite impressive; the third, I think you have a set of methodology. In fact, I didn't write one more thing, I'm quite curious about your personality, because I think we are quite similar, should be more sensitive, I think it is not conducive to trading. In fact, I will have a discussion about personality in each issue, because I think everyone's personality determines the trading strategy, which has a significant impact. Let's start officially, first talk about your trading experience, you came from the regular army, what is your journey? What made you enter this industry? How did you overcome the psychological barrier?

Raymond: I'm not very sure how to define my entry into this industry, because I have actually been buying coins for many years, but buying coins may not be much different from collecting stamps, and I'm not sure if it counts as entering the circle. My simple history is like this, I started with investment banking, then worked for an internet company, and bought coins in 2017 and 2018. At that time, others said that this thing would rise, it was introduced as a money-making opportunity, and there could be many narratives, such as the future financial reserves of humanity, and so on. But at that time, especially when there were many ICOs in China, every time I interacted with this circle, the experience was very bad. I remember there were people holding pyramid scheme meetings in the hotel lobby in Hangzhou, which shocked me a lot. What kind of circle is this?

I really felt a great passion for Bitcoin and the crypto track, and began to put in effort, time, and money after the DeFi Summer. DeFi Summer was actually a very important turning point for me. Before that, the coin circle was a place where I felt cheated, I thought of myself as a "leek" rather than a "reaper", with no winning rate, impossible to make money, so I left. After that, I found that I might not be a "leek", or I might have a certain winning rate, not daring to say that I am not a "leek", but at least I have a certain winning rate, and started to study. This is the biggest essential difference. Only after you have a positive expectation for this thing, will you be willing to invest time, passion, confidence, and funds, and a series of other things, and then start to slowly get into it. Coincidentally, the market was still good in 2021 and 2022, so I made some money, had positive feedback, invested more, and had even greater positive feedback, and that's how I got started.

In 2023, it was also very coincidental, because a friend asked me to help manage some money for them, and at that time I suddenly realized that the coin circle might be a place where I could do something, and that was when I really entered the coin circle full-time, this might be my previous experience.

FC: What did DeFi Summer do that made you feel different?

Raymond: It was very interesting at the time. I used to work in investment banking in Hong Kong, helping Chinese companies list in the United States. An important part of the listing process is price discovery, such as why Alibaba's stock opened at $68, why not $67? Why not $66? This price is actually determined during your roadshow, you have to build an order book, you have to have an order book, similar to the pools you see today in AMM, you have to draw something like this out and finally determine the price, considering countless factors, but it is determined by humans. When I saw AMM at that time, I might not have understood it at first, but later I suddenly realized that this thing was just doing my previous job, but automatically. Someone puts 50 apples on the left and 50 oranges on the right, and they put them into this model to determine the winner, I thought this was a very magical thing.

And it was already widely used, you could buy anything on Uniswap, I think for me that was a moment similar to the GPT or iPhone moment, I could immediately think of a previous colleague's work, which could be replaced by a smart contract or a protocol on the chain, at that time, for me, DeFi Summer was a huge financial innovation, it was not a scam, it had a positive impact on human civilization, it was a positive sum game, not a zero sum game, so at that time I thought this thing was worth looking at, worth spending a lot of time on.

FC: Understand. You just said that making money has positive feedback, so I really want to know, the most you've made and the most you've lost, how much were they? Will it affect your trading style in the coin circle?

Raymond: I don't think my wins and losses have accumulated my trading style, trading style starts from a person's personality, first of all, who am I, what is my personality like, what do I like, what is my risk preference, do I have a gambling nature, or am I more conservative, these personal traits determine what kind of trades I make, these specific trades may be classified into a certain style. I'm not very sure what my style is, this may not be an option in the MBTI, I'm not very sure how to concretize this, but I may be generally more conservative, so I basically haven't lost a lot of money.

For example, for things I don't understand, or things I haven't spent a long time researching, I may put in relatively little money, so even if I lose it, it's not much. When I understand something, I will put in more money, but at the same time, I watch it more closely, and it's not easy to lose a lot of money. The overall approach is more conservative. I may be more sensitive to some macro things, so many times, I may not make mistakes in some major decision-making, so it's not easy to have big problems with the overall position.

The most money I made before was actually in GLP, I remember I talked to you about making money in GLP last summer. I may be more conservative, like to look at the big picture, the most money I made in GLP was at the end of 2022, at that time GMX was very famous, I bought GMX very early, at that time FTX collapsed, and GMX suddenly became very famous. At that time, I did something, I thought it was not very likely to fall back macroscopically, so I started to buy GLP and added 4 times leverage, 4 times leverage of GLP is equivalent to 2 times Beta, 2 times BTC, because half of it is Bitcoin, it's like I bought a 2 times BTC plus GLP should have a 30-40% annual return, even 70-80%, so 4 times adds up to an annual return of over 100 to 200, but there will be some losses in between, this is an example of me being more certain, macroscopically it will come back, there is no possibility of further collapse, Binance will not collapse, overall judgment, GLP is a way for me to express leverage, this is where I made more money.

Another possibility with a higher multiple is Velodrome, a DEX on OP. To be honest, in 2021, I didn't put that much money in Crypto, at that time, I might not have known the rules of the game, or many things, I might have gradually put more money after 2022, that is, my crypto allocation became larger and larger, Velodrome also appeared at that time, so the money was relatively large, and I made more. These may roughly express some of my trading styles.

FC: What you just said was actually very good, about who I am determines your trading style, your starting point. Suppose a person who is new to this industry has just started trading, would you recommend how he should break down these issues first? For example, as you just said, I am who I am, I might be risk-averse, if I am risk-averse, I might set a stop loss, or I don't do contracts, do you have a series of questions that can help him find his own trading method or direction?

Raymond: I think everyone's background may be different. Some people have a very traditional background, such as those who used to do stock research. These people may first look at DeFi, which is the most easily understandable track for traditional people. There are also some people with obvious technical advantages, who may be more able to express these advantages in public chains and infrastructure. There are also those who are very diligent in community and social media, and meme coins may be more suitable for them. After the background, it's about risk preference. Is he here to double his money or to turn his life around? If he is here to double his money, he can probably buy DeFi-type things, but if he is here to turn his life around, the things he buys will be completely different, and his experiences and encounters will be very different. So I think maybe everyone's personality, actually, you can see from the process of their entry into the circle, they will choose for themselves, it's hard for you to give them a test and tell them where to go.

FC: Agreed. Just now you mentioned one is the background, and the other is his own risk control. You also mentioned GLP, I think this is quite typical, it's an opportunity for people who understand finance. I have actually given up on the DeFi track now, because its biggest risk is uncontrollable, which I cannot accept. You also mentioned that trading like GLP is because you understand finance, so you are willing to study the track and projects. I want to ask, from the perspective of traditional finance, did you classify these trading styles when you entered, or did you think that what you had accumulated in the past, you found that your opponents were too weak in this industry, and that I could beat them playing like this, did you have a thought process at that time?

Raymond: I think the coin circle is very different from traditional industries, it's hard to say that anyone who comes can reduce the dimension. I think even Buffett and Soros would probably lose half if they came to the coin circle. And traditional finance is also divided into many different categories, it's not two separate worlds, in fact, you can understand the coin circle as part of finance, it's just another type of risky asset, many people say that Bitcoin is a three times leveraged Nasdaq, the game rules inside this asset may be different, for example, there are many things driven by emotions.

I think if traditional finance people have an advantage here, for example, people who have been in investment banking and finance for a long time, they may be more familiar with the Fed, and have a stronger sense of the entire cycle, for example, when they talk about raising or lowering interest rates today, we have our own reading in it, when you listen to Powell's speech, you can probably feel that he may lower in July or September, you will have a feeling about these things, I think this is an advantage. Another advantage may be that the judgment of some specific major events may be better, for example, whether an ETF will be approved, why it is approved, and how the capital inflow will be? I think we may be more sensitive to these things, because this is originally part of traditional finance, so when traditional finance is combined with the coin circle, people with a traditional background will definitely have a better interpretation.

Thirdly, I think people from traditional finance still have a certain advantage in looking at the DeFi track, because DeFi is essentially finance. For example, we invested in Pendle in February and March 2023. At that time, Pendle was only worth a few cents, because Pendle is a interest rate swap product, many people said to me at the time, why do you want to buy this? Have you been on Wall Street for too long? People in our coin circle don't need this kind of interest rate swap product, but I think this product is well done, not like a scam, everything is quite good, why doesn't everyone buy it? At that time, from the background of traditional finance, I thought Pendle was a product that the world clearly needed, at that time Pendle had some competitors, but Pendle clearly did the best. So this may be an advantage, we may understand and grasp some more difficult products earlier and faster, but this may also be a mistake, it is possible that after I bought it, the coin circle really doesn't need it, and no one uses it for a long time, the coin doesn't rise, this is also possible. But from a larger perspective, in terms of understanding and absorbing objective facts, the speed may be faster.

FC: I want to ask about Pendle, maybe I just have the mindset of the coin circle, I think it's too difficult for anyone to use, too brainy, don't you think this market space will be very small because of this?

Raymond: I don't know if you remember the narrative of "real yield" at the end of 2022. At that time, many decentralized exchanges, such as GMX, and the projects listed for free on Binance, were part of the real yield narrative at the time, as long as there is real yield, it means that its yield and principal may be separated. In the historical context, I discovered Pendle, it can separate GLP, and at that time Pendle was on Arbitrum with the function of separating GLP, I think this is very powerful. Later, Lido came out, there was the LSD track, and then Points came out, there was the LRT track, and then people started using Pendle. If it had stayed at the level of GLP at that time, today's Pendle would still be very small, so it's just that at that time, I thought this product was good, but it still depends on whether this product has the possibility of further development.

FC: I have another question, how do you balance breadth and depth? For example, Buffett said the circle of competence, but in reality, it's quite difficult, especially when you manage a fund, how do you balance it now? For example, should I look at more tracks, or should I look deeper into one track?

Raymond: I think personally, I'm not very good at balancing, I try to be as broad and deep as possible. Why is that? Because it creates anxiety, for example, maybe the last cycle was year one of DeFi, everyone may have been studying it for three or four years, and they are quite familiar with it, but maybe suddenly a new track comes out, something you've never seen before, like Meme is a completely new track, AI is also a completely new track, you haven't seen this track before, you haven't seen 20 or 30 companies, how do you make investment judgments? This is actually in the market, seeing others rise, and finding that you don't understand, leading to anxiety and forcing me to do more homework.

But when it comes to pulling the trigger, I think there is still a judgment, do I understand this thing enough to pull the trigger? If I still don't understand it very well, I may not pull the trigger, continue to study and watch, we may still be more driven by fundamentals, we still need to understand and know why it rises and why it falls? If I have no feeling at all, then it's no different from gambling.

FC: Understand. We just happened to talk about trading strategies, because you are now managing a fund yourself, can you briefly talk about your fund's strategy, including how you find a project, and how you judge a project?

Raymond: Both of us, the two partners, are generally relatively conservative in terms of personality, and we also like to study things and look at new things, so many times it's still more driven by fundamentals, for example, before we invest in a company or a coin, we basically do all the necessary homework, such as the white paper, competitors, industry, on-chain data, holders, tokenomics. Some previous guests also mentioned that in fact, what everyone is doing is very similar, many people will take out the top 1000 coins and go through them, you will find that if you use fundamentals (here, fundamentals are a broad concept, not necessarily a PE/PS concept, it's about the overall situation of the company), after screening from the top 1000 coins, in the end, there may indeed only be three to fifty coins worth looking at and investing in, so what we do in these three to fifty coins is actually more of an alpha judgment, its information may be the change of price or some hot spots in the narrative.

Let me give you an example, like recently LIDO has dropped a lot, but we found that this protocol is very good, and as a result, the price has changed, it has dropped by 50%, then I think this may be an opportunity to pull the trigger, because the project's fundamentals itself actually have no major problems, but its price has changed, which gives us an opportunity to pull the trigger, but the premise is definitely that LIDO is on our whitelist, we found three to fifty coins worth buying from the top 1000 coins, LIDO is one of them, and I pulled the trigger because its price changed, that's the logic.

In terms of allocation, there may be a part that is beta, and a part that is alpha, LIDO belongs to the alpha part, and depending on our different levels of belief in different tokens, there will also be different weights, so in the end, it may be such an allocation. We like to try to buy things when the market is relatively low.

FC: So, what does "low" mean? Specifically, what is considered "low" when executing trades?

Raymond: When executing trades, for example, in a bull market, if many things can drop below the 200-day moving average, I consider it cheap. Of course, this doesn't mean you should buy when it drops below the 200-day moving average, it still needs to be related to the market conditions of the day, but many times, if it drops below the 200-day moving average, I think it's a signal worth buying, that's the first thing. Second, many times we collect, from a technical analysis perspective, each coin has its own technical patterns, its chip distribution, so when it approaches a strong resistance or support level, these are specific signals telling you that it's approaching cheap, at this point, you look at it and bet that it won't drop another 20%, and if it does, you set a stop loss, but if it bounces back, it will double, and I think the risk-reward ratio is very favorable, so I'll buy, that's the logic. Is there a possibility that it could drop 20%? Yes, but at this point, the corresponding stop loss would be triggered, and this trade would be wrong.

FC: I see that there are basically three directions, the first is fundamentals, the second is macro, and the third is the community, or the overall state of the community. I want to ask a question about data, can you give an example, from your trading perspective, what is the use of data? Because my own trading style is to do very large cycle swings, so I'm not very sensitive to short-term data changes, how does this data help you make decisions when you're doing smaller cycle swings?

Raymond: I think data is especially significant in the DeFi track. Take Pendle for example, its TVL and its price are completely positively correlated. For example, at the beginning of this year, you need to make a judgment, at that time, EigenLayer's product had already been launched, will EigenLayer's TVL continue to flow into Pendle? Besides EigenLayer, are there other large-scale things similar to EigenLayer that will be used on Pendle? Babylon, Solana, will these series of things have the opportunity to be used on Pendle? Many times, looking at these, you may be looking at some specific big directions from a macro perspective, and then their data will directly reflect, it may have launched a new pool, or a new strategy, and suddenly 3 billion, 5 billion, 6 billion have flowed in, it's very obvious, many people are using this, this is a more transparent situation.

In DeFi, for example, for Perps, you can look at trading volume; for Open Interest and Lending, TVL is a core indicator; for Dex, it's the trading volume of non-BTC Ethereum trading pairs. These core indicators will help you judge whether this thing is doing well, but no one has noticed it yet. Like Aerodrome, it's actually a dex on base, before Aerodrome's price went up this year, its volume had already risen very quickly, but its price hadn't reacted at the time, these are some opportunities. The reason for the subsequent rise is that people found that base was quite good, so what else is good on base? Aerodrome is one, so people started buying it. So there are always some data points that can help you make judgments. But at the same time, there are some situations where it may fail, like Tranchess, its TVL has been rising, but the token price hasn't moved at all.

FC: What's the reason for this?

Raymond: I think there are several things, the first is the ecosystem it's in, Aerodrome is because more people are looking at base, and Tranchess may not be known on which chain it's on; the second is the protocol's own promotion methods and capabilities vary greatly, Tranchess's community discussion is not high.

FC: To be honest, when we chat privately, you mentioned something about information advantage, I remember you said, "I may know some 'information' earlier than others," so how do you find these so-called tracks with information advantages now? Or as an ordinary trader, how should I go about it?

Raymond: It's very difficult to find a specific track with an information advantage, it actually doesn't really exist. Many times it may be a specific case, where I find something that seems like I've seen something others haven't. For example, like Ribbon at the beginning of this year, it's a protocol that has been around for three or four years and has never been used, for options. It launched a new protocol called Aevo, and the token later listed on Binance. But at the time, before Aevo was launched, when Ribbon's price was 0.5, 0.6, I suddenly noticed that someone was trading Aevo's Prelaunch token, it was over two dollars at the time, and I thought, why is Ribbon here at five or six cents, and Aevo over there is over two dollars, but at the same time, its token economic model was very clear, its token was exchangeable 1:1. This was actually a trade that made us a lot of money in March, because at that time, there was a three to four times difference between two tokens that should have been exchanged 1:1, there must be a price that is wrong, of course, the fact that it later listed on Binance was something we didn't expect, but even if it didn't list on Binance, closing that price gap would still have been a profit of at least double, so I think these are instances where we found an information advantage.

Also, I've been discussing with you recently about OTC matters, because I run a secondary fund myself, many intermediaries come to me with OTC deals for projects, for example, we knew very early on that Solana's first, second, third, and fourth rounds were going to sell tokens, and then how much for merlin, bounce OTC, we would know about these. Many times, this information will give us some additional data points to help us judge, now its VC can't resist anymore, hoping to buy at 500 million, sell at 700 million, I'll give this coin a label in my mind, maybe at 500 million it's a very strong support, because the sellers have disappeared, these are some information points. Sometimes this information may give you a lot of points, and the final conclusion is that you don't want to buy, because you find that there's too much OTC for this project, so the mindset is still, can I judge whether this thing is something only I know, and when I know it, is it something only I can act on, or is this information not reflected in the price yet, can it be traded, it may be a series of judgments, in specific cases, to discover whether you have an information advantage or not, if you do, it's easier to double down.

FC: So this is a question that often troubles me, how do I judge whether this information is something only I know, and whether this information may only be something I can know in the future?

Raymond: I understand what you mean. Several previous guests have mentioned a similar theory, which is the theory of information dissemination. Where am I in the chain of information dissemination? We have previously discussed this theory, but we feel that this theory doesn't work very well because each person's judgment of every situation at every point in time is at a different place in the information chain. For example, I might be the primary source of information for Project A today, but I might be the seventh source of information for Project B, but I'm still me. Each person's level of information varies for different projects and different coins, so it's difficult to judge the flow of information by labeling people. I think this is very difficult to determine. But I think many times, for example, the examples I just mentioned, there may be some objective criteria, and then there are places where arbitrage can occur in terms of price. Some objective information can be unearthed, allowing you to discover that you can potentially earn a little more alpha.

FC: Next is a personalized question for you. Because you previously worked on a project with 30 million DAU in Web2, and you also mentioned on Twitter that many people don't deserve to start a business on the internet, so I'm not sure how your past experience has helped you in evaluating web3 projects? I think sometimes it might become a burden because you find fault with everyone.

Raymond: In my personal experience, I have worked on product development and operations, and apart from not being able to code, I have held every position in major internet companies. So many times, when I look at a product, I can quickly estimate how high the replication cost and barriers are for doing that thing. I have a good idea of how many people and how much time it would take for me to do it myself, this is a very clear feeling. Some things are difficult to do, some things are easily replicable, and some people are easily copied. The easier something is to replicate, the less barrier it has, and the less worth it is to buy, it lacks exclusivity.

The second point is that as someone who has managed products, I often have certain expectations for a company's development pace. For example, the first time I met with a project team, and they told me they wanted to do five things, I thought it was good, but two months later, they still hadn't done it. From the perspective of a product manager, it's like, why hasn't the schedule been completed, why is it so far behind, what have they been busy with? I might have this feeling because I know how long it takes to do this thing, so when they haven't done it, I know they haven't completed their assignment for this period, and I'll deduct points for that.

Many times, because I have entrepreneurial experience, I can often see what another entrepreneur wants, what they need, and what their weaknesses are from a human perspective. I think these experiences from managing large products have given me valuable insights.

The second point you mentioned is about biases. I think I have quite a clear bias, because in the crypto space, there is actually very little innovation, and many times people just keep doing the same thing over and over again. I really dislike doing the same thing on different chains, with no originality, that's a big negative for me. But in reality, sometimes you have to try to maintain a more open mindset, maybe the time period is different. For example, in 2020, making a Perp Dex might not have been used by anyone, but in 2022, it might be used by many people. In 2020, Pendle was completely unused, but in 2023, it might be used by many people. Maybe the time has changed, the space has changed, and the objective environment around you has changed, something that didn't have product-market fit at the time, now might have it. (The same goes for Web2.) The first short video platforms were like Xiaokaxiu and Miaopai, and the earliest templates of Douyin were very similar to them, but you can't say Douyin is just another Xiaokaxiu, the objective environment has changed, leading to a greater likelihood of success for that thing, that's quite clear.

FC: I think this change is very important, but how do you seize the change? How can you quickly distinguish whether this time is different from the last?

Raymond: I think it's quite difficult. If something comes out, I think based on my understanding, in general, I'm not the first to jump on it. The people who jump on the first wave need to have a more acute judgment of the objective environment. What about the second wave? It's when it has already come out and has gained some social influence, like Friend.tech, or Farcaster, these are some new things that have emerged in this cycle, maybe due to some special changes, changes in the ecosystem or changes in capital flow, causing this thing to work better, it's hard to say, but what I need to do is, after this thing comes out, as quickly as possible, try to change my preconceived notions about the track, so that I can embrace this thing more quickly with a new mindset, it will be easier to catch the second wave.

FC: From my perspective, I generally look at things from the perspective of "people". I've found that the first people to embrace new things are two types of people, one is the "indebted" person, and the second is those around you who have good relationships but whom you look down upon. I think these two types of people are the easiest to find alpha and the easiest to miss. For example, when I left 36Kr in 2017, at that time, I was actually an "indebted" person, I was the most sensitive to changing so-called social status or changing my life situation, and when I started my business, I was also in debt, at that time, I was more eager for new opportunities than anyone else, so whenever there was a new opportunity, I would jump on it. When these people start making money, I often keep an eye on them, for example, if I feel like someone who was in debt suddenly starts making money, I immediately go talk to these people and ask, what have you done? Especially in our industry, I think this is a type, like Mingwen is a typical example, including college students who just arrived. The second type is the people around us, I chat with my friends, there is a kind of person who is often easily overlooked, it's the brothers around you, there's a saying that there are no saints in the neighborhood, even Jesus was a carpenter's son, something like that. So when the people around me start a business, my instinct tells me that when I feel they can't do it, I always go take a look, maybe my inertia will make me miss this type of alpha. I think these two are how I judge now through people, when this change occurs, whether I should go after it, just sharing my thoughts.

Raymond: I think you put it very well, actually, your mindset is already very open. I'll give the example of Mingwen, it was a real slap in the face. Because when Mingwen came out last year, one of my juniors below me started telling me about it, but I just couldn't accept it. The most memorable thing was, he probably told me about it every two weeks, telling me to buy SATS, but I ignored him. Later, this junior got some, probably about 0.5% of the tokens, SATS, so you can imagine, I don't know if he sold at the peak, but the returns were quite exaggerated.

FC: So did he quit?

Raymond: We are friends, not in an employer-employee relationship. But I think after this incident, I immediately felt that I missed out on this thing. Later, when it was around 20 dollars, I bought ORDIs again, and this year during the Rune, I made a lot of Rune trades, I think it's okay, so when the first wave appears, if you still have the opportunity to catch the second wave, you should approach it with a more open mindset and get back on board.

Let me talk about the example of Pendle, I bought it at 2 cents and sold it at around 7 to 8 cents, on the day it listed on Binance, I thought that was about it for the company, listing on Binance was already very impressive. But I didn't expect that later they did a lot of things on their own, so I actually had a bit of a demon in my mind, that I didn't buy Pendle for a long time, when this situation arises, new things happen, LRT comes out, you need to embrace new information, get rid of the demon, and buy it again, otherwise you'll miss out even more, I think people should change in a timely manner.

FC: Lastly, two questions about trading strategies. For sensitive people like us, what is on your stop doing list now? I believe you must have thought about how to avoid the worst-case scenario for your strategy. What do you do? And I don't know if your current trading style or strategy will become ineffective one day?

Raymond: Let me first talk about personality. I think I have a relatively volatile personality. I believe our personalities are quite similar, not completely calm. My partner is very emotionally stable, like a robot, so we complement each other very well. I often say, "We must buy it, it's going up, I need to buy it, it's going down, I need to sell it." Many times I express these emotions, and he helps balance me out, brings me back to a certain point, like a second confirmation, "Do you really want to buy? Do you really want to sell?" My partner is a great help to me. But personality is actually very difficult to change. The rule I set for myself is, because I have a more impulsive personality, before I make many trades, I have a clear stop-loss for buying anything, especially at the fund level. At the personal level, my risk tolerance might be slightly higher, but at the fund level, the risk tolerance is smaller. Setting a stop-loss is a clear thing. For example, if I think it has dropped a lot today and I buy it, but then it drops another 20%, that means my judgment was wrong, so I stop and wait. I can wait until it drops even lower before buying it. But initially, at the level of individual trades, a clear stop-loss is still necessary. Both stop-loss and take-profit have their own principles, don't gamble. What does gambling mean? Gambling means there are no principles. I buy something and then pray, hoping that my coin will rise, that's gambling. But if I buy a coin with an expectation of how much it will rise or fall, it will give you more opportunities in the long-term game. If your overall winning percentage is higher than 50, the longer you play, the more money you make. So, stop-loss might be a more clear personal indicator for my personality.

Another thing I think I do very poorly, but I'm working on it, is not getting emotionally attached to your positions. The crypto space is a very magical place, and many times people cry, shout, and insist on buying a certain coin, as if the world will collapse without it. This is an emotional response in the crypto space, especially with Memecoins, it's extremely exaggerated. Many times, it feels like Memecoins are like your ancestral graves, and others can't say anything about them. Being extremely emotional is a very bad habit, so it's best to try not to get emotionally attached to your positions. If it drops, it drops, then stop-loss and sell it, if it rises, then take-profit and sell it. Don't hold onto it because you believe Solana will definitely reach 500 or 800, then you just keep holding it. Your emotions far outweigh your rational judgment, which is really bad, especially in the volatile conditions of the crypto space, it's really unpredictable.

FC: How do you detach yourself from emotions? What method do you use?

Raymond: There's no way, just remind yourself not to get emotionally attached. A specific method could be like this, for example, you think your own child is definitely the most beautiful, but if you ask another relative or friend, "Is my child good-looking?" they might hesitate. You can take your child out for a walk more, ask others, "Is this coin good?" and they might say, "I'm not sure." These are ways to cool down, it's not easy to get carried away.

FC: I have a method, I've seen how many of my friends' companies eventually find out the truth. Their approach is to always have two groups of people around them, they habitually collect the opinions of those who support and oppose the matter, and they act as the judge themselves, especially exchange owners often do this, asking A and B, they must find agreement and disagreement, then they feel at ease. I think this approach, always being the judge and never the athlete, is a good method.

Raymond: Yes, but the person who can execute this method, to be honest, actually doesn't have much emotional connection to the matter, they are not easily emotionally connected, so they can do this. But for those who are easily emotionally connected, you will find that the number of people who agree with them gradually increases, and the number of people who disagree with them gradually decreases, the structure of the team changes, I think it might still be related to personality. I am the kind of person who is easily carried away, so I remind myself not to do this, but some people are naturally more detached, like my partner, he is not easily carried away, so he might not have this problem.

FC: I understand. So I think the most important thing for us is to have a partner like this, we have a partner like that too. I also have another question that I care about, which is what do you think we should focus on in the second half? I now define the first half of the bull market as the halftime break, what do you think we should focus on in the second half? What's the logic?

Raymond: Are we already at halftime in the bull market?

FC: What stage do you think we are in? Do you think it's the pre-bull stage?

Raymond: I still think it's more of an early stage, because everyone is still in a very chaotic and turbulent state, including the delay in interest rate cuts, the general election, and the current inflow of ETFs. These things are actually brewing and preparing for a bigger bull market. The further it is pushed back, the higher my expectations for the bull market. That's how I see it, but it's important not to die on this road in the middle. So I think it's probably more cautious during the summer vacation period, in June, July, and August. Secondly, from the overall track perspective, I recently had an idea, not sure if it's correct, we can discuss it. In the previous cycle, L1 and DeFi were clearly tracks. A track means that there are several horses running at the same time, and all of them are doing well, that's a track. GameFi at the time, to be honest, was probably just one or two miracles, GMT and Axie were miracles, it wasn't a track, not many games were running, so I think this track is different from a miracle. In this cycle, I think Meme and AI are clearly track-level opportunities. What does track mean? No matter what you do in the track, you're right, everyone likes it, there's a high margin of error, there's external input, and others are easy to pick up, these are track opportunities. But Pendle in this cycle is actually a miracle opportunity, because DeFi doesn't seem to be a good track anymore, there may not be many track-level opportunities left.

FC: I think this definition is quite interesting, track and miracle. Because I found that ultimately, the cycle is greater than the track, which is greater than individual projects. Choosing individual projects is actually finding track-level Alpha. Although I understand this, I found that, for example, with AI, I mentioned last time, it's because I focused too much on the fundamentals, and I found that I couldn't invest in anything, but actually, that's a track for AI. In my title, I mentioned that you think the next three months might be a bit dangerous, why do you think so? From a macro perspective. Another question is, you think that in the past, interest rate cuts, regardless of specific indicators, actually led to a significant drop at the moment of the cut or the beginning of the cut, and there was a severe retracement. Of course, there are many issues, such as the unemployment rate, I don't know how you see it this time.

Raymond: Let me first talk about the fact that there is a retracement when interest rate cuts start. Looking at historical data, you might be able to summarize this pattern, but the actual situation is that this time is different. It's different because in the past, the interest rate might have gone up by two points, and then cut by half a point, for example, if you look at the interest rate cuts in 2007, 2015, and 2018, they were actually relatively small cuts, so they didn't last long, maybe just half a year. But this time's interest rate cuts, we started at 5.5 and went all the way down to the neutral rate, which is 2, so if it averages a cut of 25 or 50 points each time, it will take nearly two years to complete all these cuts. So this is a very long time to cut interest rates. I don't think we will fall for more than two years because of this, I think at least in the first half of the interest rate cuts, for example, from 5 to 4 to 3, it will definitely be relatively loose in terms of liquidity, creating an overall positive environment for risk assets, which is something I believe in.

The second thing is why I said the next three months might be more risky? Maybe my view is different from many people in the market, because our current expectation is that there will be two interest rate cuts this year, but I may not be so optimistic. I think there may only be one interest rate cut this year, maybe in December is the first cut, why? From Powell's perspective, what is the biggest concern for a man in his 70s who hopes to leave a mark in history? It's that we cut interest rates, and then various economic data in the United States becomes too good, leading to a return of CPI and re-entering an inflationary environment. If we raise interest rates again, that's the scariest thing, it will directly lead us to a situation similar to around 1982. At that time, the U.S. government was in the early stage of Reagan's presidency, they first cut interest rates, then found it difficult to control and raised them again, which would cause huge disruptions in the entire economic environment, and the economy would experience major turmoil for the next two to three years, not knowing whether to rise or fall, which is actually very dangerous. So, to avoid this situation, if I were Powell, I would certainly hope to find very strong evidence to support us, we must cut interest rates before I do so. This strong evidence may be very good CPI data for a very long time, maybe more than three months. The second is that the United States is experiencing major recessions or economic crises, but does the U.S. economy look like it's in trouble now? Not at all, so there is no urgent need for an interest rate cut. Why should we cut in July, August, September, October, November? This is the first point. I think from the overall perspective of the next three to five years, the requirements for the first interest rate cut are actually very high.

Secondly, in November, the election is coming, what is the biggest difference between these two presidents? One president will print money, and the other president will print a lot of money. If we cut interest rates in September or October, and the new president takes office, if it's Trump, he might start cutting taxes and doing a lot of things, there will be a very large fiscal stimulus. At that time, the government will become an inflationary government, printing money, so what should the Fed do? Different governments, different presidents, will summon different monetary policies. If I were Powell, why would I rush to cut? Because the Fed is a reactive institution, when there are changes in society, changes in data, changes in the economy, I make corresponding operations to counter these changes. The most difficult thing to predict now is, who will be the president? How much money will be printed? The interest rate cut path for different presidents is different, so I think these are both very big uncertainties, so forget about July, August, and September, this process will be accompanied by what? Actually, there will be a lot of ups and downs, I think there will be a wide fluctuation, and in the process of this big fluctuation, maybe in early July, because ETF trading has started again, there will be a surge, then a drop in August, and as the election approaches, I think the bull market will become more certain.

FC: I think this part is very exciting, it's really a feeling that only you have with your background. Another thing I want to ask is, many people are judging the ETF situation, why have I not sold Ethereum? My logic is, first of all, the fundamentals of Ethereum have not changed, I think the logic for buying Ethereum last year and selling Ethereum this year is all emotional, so if I were the main force, this is very illogical, the fundamentals have not changed, the price is so low, to be honest, it's a state of very poor liquidity, it's very easy to operate, so I have a counterintuitive idea, I don't want to sell because I think it's highly probable that even if the ETF doesn't pass, Ethereum won't stay down like this. I don't know how you view Ethereum's ETF, do you think it will be like Bitcoin in the future, or does it have its own style? Including some of my LPs actually calculate, for example, BlackRock does ETFs, they need to reach a certain scale for it to be worthwhile for them, and then they calculate what scale Bitcoin might have, how do you view these things?

Raymond: Yes, but having a certain scale and being able to achieve it are two different things, but indeed, ETFs are not a particularly profitable business, because the margin is too small, like Cathy Wood has exited several ETFs, because this business is actually not very good. The Ethereum ETF has been approved now, it's just waiting for the S1 to be approved before trading. I think the overall inflow should still be okay, part of the inflow comes from normal asset allocation, and another part includes a lot of options for short arbitrage, buying spot for various funds, quant funds, these are also very large, I think compared to their respective market caps, it may be slightly less than Bitcoin, but not significantly less. I think this should be a relatively bullish thing for July. The situation it may bring is that because it changes the market sentiment, everyone says Ethereum is good, Ethereum is the future of human civilization, but maybe after a month, they find that the ETF is starting to outflow again, and then everyone collapses, this situation may occur, but in the early stage, it should be more biased towards rising.

FC: Very good, I think today we've talked about trading strategies, and that's it. Finally, I think we should talk about a personal growth issue. I'm quite interested to know, for example, your current trading style, which person or which knowledge content or which book has had a greater influence on you, and if someone wants to become like you, what should their learning path be like?

Raymond: I browse Twitter quite a bit, actually there's no one I particularly like, or think is always right. If I had to say, it might be GCR, maybe everyone thinks of him as a god-like figure. I think I may have a more diverse learning approach, I might learn from different schools of martial arts, technical, emotional, fundamental, each school has different people, and I might look at all of them, I won't set very clear restrictions for myself. Setting a very clear framework for myself, or labeling myself, may not be the right thing to do, because things in the crypto space change too quickly, a school of thought may be eliminated in three months, so it's important to learn new skills as much as possible.

FC: Where do you usually discover new skills? What new skills have you seen recently?

Raymond: I'm on Twitter, I often browse the timeline, save tweets, I've saved at least a few thousand tweets, if someone writes a very good article, I'll read it, if I haven't read it, I'll save it first, there are a lot of these. It's hard to say, for example, I've been looking at meme coins recently, because this is not a track I'm particularly good at. In 2023, I was responsible for doing PEPE LP on-chain, maybe one of the largest, maybe even the largest, at that time, half of the pool on Uniswap was mine, it's quite exaggerated to say that, it wasn't just my money, it was also the money of those friends. The core strategy of our PEPE LP at that time was a Delta Neutral strategy, meaning we had to hedge, so the whole strategy was neutral, I had zero exposure to PEPE, but PEPE has risen so much this year, the other day I looked at our wallet, and now there's a lot of money, I can't even count all the zeros.

So maybe everyone has a different personality at different times. At that time, I used it as a Delta Neutral tool, today I use it as a meme coin, it's not suitable for me to not understand it, so I will try to read everything about PEPE, all the discussions about it, everything, I think the basic work needs to be done. In this process, I will find that some meme traders have more insights, their technical analysis is more mature than mine, they seem to understand it better, and I will communicate with some of the top 10 traders on Binance, I think they are quite helpful. Everyone's views are different, but you can hear the voices in the market, and the reasoning methods of different schools of thought, I think it's quite interesting, these will form an overall unstructured information, helping me form a personal subjective judgment, it may not be influenced by a single piece of information.

FC: I think this is quite interesting, about learning methods, for example, if a new track appears, do you have a quick method to understand the track and make a trading decision, what is the learning path? I think you definitely have a set of methodologies. You mentioned finding the best people, is there anything else?

Raymond: Let me give you an example. If someone tells me that the AI track is a new track and I don't know anything about it, what I might do is go to Coingecko and pull up the top coins in the AI track, maybe look through the top 30, pay attention to what needs to be focused on, read the whitepapers that need to be studied, and do the basic homework, accumulating maybe a couple hundred hours, which should give me a relatively shallow understanding of the track. At this point, you close your eyes and throw away the books, and think about what you remember, what might be more crucial, who is the father of whom, who is the son of whom, how to draw the map, just imagine throwing away the book and being given a blank piece of paper, what would you write, those might be the more important things. In this process, if you encounter problems, solve them, study them, I think basically a couple hundred hours should give you a fairly clear basic understanding of a track.

FC: Actually, I think the process you mentioned about closing your eyes is very important. There's a book called "10x Easier Than 2x", I actually haven't read much of the content, but I think the title itself is very powerful. When you look back with your team, in a year, you basically make one or two important decisions, such as choosing a track, such as when to buy, basically just these two things. Including what you said about looking at this thing, actually the most important thing is not that you go to look, I believe people like us often collect a bunch, but in reality, sometimes when I look back, I think, what do I remember that I must look at, for example, I'm going to watch the sharing of the founder of 0xscope in a while, I think it's great, I will invite him for the next issue, because I'm not good in the tools area, so I think this action itself may determine what you really remember and what is most important to you, I think this is very useful. There's one more question, you recommend a book or a person that everyone can go and see, someone who has been helpful to you.

Raymond: I think I might recommend a book that I haven't completely read myself, this book is written by Michael Lewis, "Going Infinite", it's about the autobiography of SBF, I think it's quite interesting, it talks about SBF's growth from childhood to adulthood, and the process of founding FTX. In this process, you actually get to experience another person's character, because that person's character led to his choices in childhood, and then in high school, one choice leading to another. Actually, each of your choices often narrows your life, rather than broadening it, for example, choosing to study math and choosing to study language might cut your life in half, in the process of continuous choices, you refine your plan to do this thing, but his choices are consistent, so I think character is quite interesting, I think it's quite fun to see the character development process of a crypto industry giant in the last cycle, and I think it will also give me a different perspective on some of my trading methodologies, including how I look at things, so I highly recommend this book.

FC: Thank you. The last time I saw Sam was actually in Shenzhen in 2018 or 2019, it's quite magical, they were still having an after party in Shenzhen at that time, it's quite interesting. Lastly, I recommend everyone to listen to Raymond's blog, called "Mars Immigration Guide", the latest issue is Raymond chatting with my other partner Eraser about his previous investments in Africa, it's quite interesting. That's it for today.

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