This isn't investing advice, it's just a discussion about what I've been trying to learn over the last couple of months to maximize my long term investment in the Steemit ecosystem by increasing my Steem Power.
In the beginning, I just sold all SBD earnings on the internal market right away and powered up the STEEM. Then I started learning more about the SBD as a smart contract, which acts as a debt instrument worth $1 USD worth of STEEM. I did that a couple times, but I also thought about the changing conversion ratio of STEEM to VESTs and how that ratio is only increasing (it's currently at 1M VESTS = 305.074 STEEM). So powering up as soon as possible makes a lot of sense because you're not only getting about ~4% increase in Steem Power right now for your VESTs (as share dilution protection) but buying VESTs now is cheaper than buying them in the future (in terms of STEEM).
At the same time, if SBD are under valued (i.e. below $1 USD), you can get a nice return converting because that lower amount (say, for examle, $0.80) will get you a full $1.00 worth of STEEM (as far as I understand). You just don't know what the price will be since it uses a 1 week median price based on the witness feeds. You also have to wait 7 days for your STEEM, so you're losing out on that ~4% for the week.
My eyes still glaze over a bit when I see total_vesting_fund_steem, total_vesting_shares, steem_per_mvests and such, but I'm learning more each day about how this all works.
To try and better understand this in concrete terms, a week ago I stated a convert on 300 SBD which paid out today:
owner "lukestokes"
requestid 1,471,982,481
amount_in 300.000 SBD
amount_out 318.133 STEEM
That comes to a price per STEEM in USD terms (assuming a $1 SBD) at $0.943
7 Days ago, when I started the conversion, BTC was around $585.
STEEM: Price 0.00197422 BTC = $1.1549187
SBD: 0.00152852 = $0.8941842
Using those numbers, 300 SBD used to buy STEEM 7 days ago would have gotten me 232.272 STEEM
$0.8941842 * 300 = $268.255
$268.255 / $1.1549187 = 232.272 STEEM
318.133 is a lot more than 232.272!
Seems like I did well, right? But what about that share dilution protection I would have enjoyed if I had been powered up for those 7 days?
232.272 * 1.04 (i.e. 4% increase) = 241.563
Yep, still good.
But wait, there's more. The conversion ratio between Steem Power and VESTS is increasing. If you convert STEEM to VEST today you'll get more VESTs then you will in the future. I don't have a lot of data points for this, but based on this rough guess, it looks like the ratio goes up around ~2 Steem Power per day.
7-12: 210.998
8-13: 273.548
8-14: 276.103
8-31: 305.074
So, in a sense, my 318.133 buys me around ~14 Steem Power fewer VESTs, so can pretend I only got 304.133.
So the difference between 304.133 and 241.563 is 62.57 STEEM worth of VESTs when powered up. Not bad! :)
Why did this work out so well? Probably because during the week of my conversion, the price of SBD were mostly below $1 and the price of STEEM dropped quite a bit from $1.1549 down below $.80 at one point.
Could I have lost money if the price of Steem had gone up? Yes, it's quite possible. Then again, timing the markets is next to impossible, which is why I like spreading things out over 7 days. Even then, sometimes you'll win and sometimes you'll lose.
To further complicate things, the SBD also has a 10% return and can be used to promote posts which could equal more returns. That creates an incentive to hold SBD and use it effectively for gaining even more Steem Power in the future.
So, should you Convert, Power Up, Sell or HODL?
I don't really know. I do know that I'm learning a lot and enjoying the ride. :)
My Take away?
Maybe if the price trend is up, and you think that trend will hold for most of the 7 days to come, sell on the market and power up right away. If the price trend is down, the SBD is below $1, and you think that will hold for the next 7 days, go ahead and convert.
That, I think, may be what I attempt to do.
What do you think? Are you trying to maximize your Steem Power for the long term? What techniques are you using to do so?