Surviving a Market Correction — Part 1 — Passive Income
Everyday a cryptocurrency trader would read the cryptocurrency news online, look to see what would be a few great trades for the day, then move a portion of his funds over to that cryptocurrency, then sit and wait til the profits spike. For a time that trader made massive amounts of money. He would have a return of +2000% month-to-month and believed that he could trade forever. Until one day a massive shift happened inside of the market. All of the assets that the trader has and could invest in began to drop significantly. It became a problem, seeing that the trader began using this currency as a significant income stream for his life. He was losing that stream and that money would begin to sit idle over time. Therefore that trader had no further income stream. What is that trader now to do?
I’d like to bring focus to various concepts that survive volatile markets: Cashflow, systems/feedback loops. In almost every situation where companies and organizations survived each market correction, they had a stable income, a niche that they filled and a way to get consistent clientele. Amazon is a recent example. They stuck to selling books at the beginning until they could dominate it, had a stable income and grew their business and engineering reputation over time to different products. The same was true for companies like Ford, Coca-Cola and Apple survived huge economic downturns.
Amazon is a very special case. Even now they focus on reinvesting the vast majority of their profits instead of pocketing them or returning funds to their investors. That’s because Amazon mastered one of many things. In business and life, feedback loops are everything. By taking money and investing it to improve a process or increasing the depth of services for your customer, you can potentially get more customers, or improve the quality of their life. All the same, if you have a feedback loop that produces money then, which you can reinvest consistently each day, week, and year, you can grow your funds exponentially over time.
Both Guy Kawasaki and Robert Kiyosaki had similar ideas. They insist that one must focus on cashflow, not profitability. All to be able to handle the randomness of life. Here’s a quote from Guy:
Focus on cash flow, not profitability. The theory is that profits are the key to survival. If you could pay the bills with theories, this would be fine. The reality is that you pay bills with cash, so focus on cash flow. If you know you are going to bootstrap, you should start a business with a small up-front capital requirement, short sales cycles, short payment terms, and recurring revenue. It means passing up the big sale that take twelve months to close, deliver, and collect. Cash is not only king, it’s queen and prince too for a bootstrapper.
With a reasonable cash-flow a person or company can exponentially grow and move knowing they’ll have some income over time. This helps increase the flexibility of that person or company. So how would such a cashflow work?
It first starts by getting some sort of income. If you can do that, it becomes very easy to start the process of creating cash-flow generating assets. Each time you buy a new asset you’d be able to take a bit of money produced from those assets and pay your expenses (taxes, rent, food) with that money:
The logic of reinvesting first with cryptocurrency mining:
- For every advanced video card I can make ~$100 monthly, and the cost of a video card would be ~$300 each. That means the investment would make a complete return in 7 months individually.
- If I put an upfront investment of $5000 that would earn me ~$767.56 each month as seen here
- I can get $100 for every ~$700 I invest I would get around ~$850 the next month
- Here’s a table of how that would operate over time

$3900 * 12 = $46800 after a year
Your $5000 initial investment becomes $46800 a year. This can easily be amplify the growth by using the method sorting the sales and payment cycles and focusing on recurring revenue. Here’s an example:
- Meet Jim. He has $10,000 in two alternative universes to invest and $20,000 in savings to live off of. Each of them can only work on selling their investment.
- Inside of universe #1 Jim buys $10,000 worth bread. Inside universe 2 Jim buys a $10,000 piano. Both Jimmy’s intend to sale their products.
- Bread can quickly rot and perish, so Jimmy #1 is forced to sell his bread every week. Luckily people buy bread every week, so selling isn’t too hard. He can sell the bread and get 5% markup. That equates to $500 extra the first week in gains.
- A piano can sit idle for long periods of time, and people rarely buy pianos, so Jimmy #2 can only sell a piano for once every 12 months. Jim #2 can sell the piano and get a 5x markup. This equates to $50,000 from that big sale
- Each Jim has bills of $1700 USD each month that they have to pay.
- Let’s look at both of their balance statements over 12 month
Jim #1
Jim #2
Recurring Incoming Revenue is very powerful. It’s even more powerful when you can reduce the sales cycle for the revenue stream you have. If you’re able to reduce a revenue cycle from a year into a month, a month to a week or a week to a half of a week, you will have more flexibility and more exponential growth over time. As you can see, Jim’s 12 month sales cycle only returned $49,699 over a year of reaping the gains from the 5x growth. The first example is of something called an exponential feedback loop. Where the gains made from the output of each month causes the total amount of investments to exponentially grow.
Of course, such investments are more complex than a simple linear compound interest model:
- In the bread example, if wheat becomes more scarce do to farming difficulty, and therefore more expensive, that price trickles up to bread and less people could buy bread each week. Therefore much of your investment could be lost. Conversely, the bread you sale could be advertised more inside of a cooking show and people could potentially buy the same bread at a higher price due to the increase in demand, therefore your investment can return a higher return during certain sales rounds.
- In the piano example, it’s possible the piano could increase in price due to a lot of pianos of its type getting removed out of the market. Conversely, by having a reputable buyer finding a major flaw and/or defect of a given model can quickly cause the value of that piano to drop. It makes the long sales round harsh.
Though the volatility created from the outside world can alter your investments’ returns, your greatest asset is having your revenue sources recur in short cycles. This will help you in two ways:
- You can dynamically diversify your assets based on what you think will happen in a near-future
- You can cut your loses faster than if you had an asset that you could only sell over long periods of time.
Passive Income Ideas
Cryptocurrency mining
While the GPU prices are falling, if you can find a large spacious place during the winter where you’d pay minimal electric bill to do mining, you can make $4 a day and guy exponentially more GPUs over the next few months at a cheaper price than what they currently are.
Real estate
Buy property you can rent. The money you receive every month from your renters can be reinvested to get you more money over time. Eventually you could get full apartment buildings and scale the cashflow you’d get overtime.
Invest into BitConnect
Get referrals with Bitconnect and people will get you money over time.
Create a YouTube channel
You can build great content and advertise using Fiverr. Then get people to buy things from referral links. You can use the gains from that to invest in stocks or cryptocurrency.
Sell eBooks based on knowledge
Know a lot about something yet you don’t want to write an entire book about it? Well I have a serious solution for you. Go to fiverr and hire people to build your book with you.
Assuming you built the social media marketing channels, you can start by giving your book away for free then get sales everyday.
Create social media channels and market
This is the same as the Youtube point above. Apply it to more social networks.
Craft a data analysis technology and convince customers to buy certain cryptocurrencies
You’re leveraging your knowledge to get other people’s money working for you
Get an Airbnb rental property
Same as the real estate rental property. Only you make more per day
Invest in multiple securities
These will be only to hedge the the other forms of cashflow.
Create an auto diversification Ethereum script in solidity
This was done with Prism. You can do this to make sure you never lose too much money
Building Master Nodes and Secure nodes on cryptocurrency systems.
Those nodes will gain interest over time. Here are some awesome currencies to set this up in.
- Dash
- Ethereum (Under Proof of Stake)
- Pivx
- ZenCash — The better alternative to ZCash. They’re not corporate controlled now, making them a better bet
